Alibaba inks Russian JV with Kremlin fund, Mail.ru

Asia’s most valuable firm signs an accord to establish AliExpress Russia, which the local investors will collectively control

MOSCOW • Alibaba Group Holding Ltd is setting up a US$2 billion (RM8.3 billion) joint venture (JV) with a Kremlin-backed fund and billionaire Alisher Usmanov’s Mail.ru Group Ltd to grow its e-commerce business in Russia.

Asia’s most valuable company signed an accord yesterday with the Russian Direct Investment Fund and Mail.ru to establish AliExpress Russia, which the local investors will collectively control.

Alibaba will fold the domestic operations of its online marketplaces Tmall and AliExpress into the venture, while Usmanov’s MegaFon PJSC will sell its 10% stake in Mail.ru — worth roughly US$486 million at Monday’s close — to Alibaba in return for 24% of the venture. That deal values the new outfit at roughly US$2 billion.

Alibaba, which is steadily expanding its reach beyond China as part of a global expansion, will access Mail.ru’s large audience through two of the country’s most popular social networks.

The Russian company will prove a key ally in a major market: It recently invested in online food-delivery and ride-hailing and rolled out Pandao, a mobile platform for selling Chinese goods.

“A big part of what we’ve been able to develop so far in Russia has been our cross-border business,” Alibaba president Mike Evans told reporters. “But the future, which will require the presence of our partners at this table, will involve building a much bigger local business.”

Pandao will also get folded into the Alibaba venture. The Russian Direct Investment Fund will add an unspecified amount of funding in return for a 13% stake, while Mail.ru holds the remaining 15%.

The parties inked the deal at a Vladivostok economic forum attended by President Vladimir Putin and Alibaba chairman Jack Ma.

The Chinese company had been negotiating a similar deal with Sberbank PJSC, Russia’s largest bank, but abandoned talks after the lender partnered Yandex NV instead. Alibaba recently rolled out Tmall for Russia after winning consumers through AliExpress, its international marketplace.

Ma, who started Alibaba.com in 1999 as a business-to-business marketplace with 17 co-founders, this week announced plans to step back from the Chinese e-commerce titan. His company, which is pushing into overseas markets from South-East Asia to Russia, last year saw daily package deliveries reaching 55 million.

Ma is now China’s richest man, worth about US$40 billion, and a headliner at global talking salons like Davos. At the same time, he’s complied with — and fiercely defended — his country’s ruling party even as it exerts ever tighter control over media, the Internet and any hint of dissident speech. — Bloomberg