AliExpress Russia Joint Venture close to launch

By Chris Dawson June 7, 2019 - 10:03 am

A joint venture between Alibaba Group, Group, MegaFon and the Russian Direct Investment Fund will see AliExpress Russia Joint Venture launch soon.

Russia’s Federal Antimonopoly Service has cleared the joint venture to move forward. Now, Russia’s most-popular shopping site, Alibaba-owned AliExpress, with their partners will create what they call a one-stop destination for merchants, consumers and internet users across Russia and the CIS to communicate, socialize, shop and play games, all within the same online ecosystem.

“This partnership will enable the AliExpress Russia JV to accelerate the development of the digital consumer economy of Russia and CIS countries in ways that no one party could accomplish alone. Together, we are uniquely positioned to offer consumers in Russia and neighboring countries an innovative shopping experience by combining social platforms with commerce, as well as enabling regional brands and SMEs to sell their products locally and globally.”
– Daniel Zhang, CEO Alibaba Group

In addition to the regulatory approval, the companies signed “definitive documents” in Moscow on Wednesday that bring AliExpress Russia closer to launch. First, they agreed that the joint venture would be majority owned by Russian shareholders, overseen by a board of directors with representation from RDIF, Alibaba, MegaFon and Group, and managed by two co-CEOs. One CEO will be nominated by Alibaba and the other by Group.

In addition, the AliExpress Russia joint venture and Group will enter into a strategic cooperation agreement relating to, among other things, traffic and product initiatives. The joint venture also will promote its services on Group’s platforms through exclusive product integration and marketing solutions.

Each shareholder has agreed to make certain contributions to the joint venture, including:

  • Alibaba will invest $100 million and contribute AliExpress Russia into the JV. This consists of Alibaba Group’s current Russia-based domestic and cross-border operations of the global retail marketplace business of AliExpress.
  • MegaFon will sell its 9.97% economic stake in Group to Alibaba Group in exchange for a 24.3% stake in the JV, with 30.2% voting rights.
  • Group will contribute its Pandao e-commerce business and cash investments of $182 million in exchange for a 15% stake in the JV, with 18.7% voting rights.
  • RDIF will invest $100 million into the JV and may further acquire additional shares of the JV from Alibaba for $194 million. Upon the exercise of the option to purchase the additional shares in the JV, RDIF will own economic and voting stakes in the joint venture of 12.9% and 9.6%, respectively.

AliExpress launched in Russia in 2010 to bring a new selection of affordable products to consumers by giving them direct access to the China market. Alibaba later included access to its B2C marketplace Tmall via AliExpress Russia as well.

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