Alibaba refueling in Russia with a game-based joint venture, shopping and more – TechCrunch

Ali Baba China's e-commerce giant has launched a $ 2 billion joint venture with one of the country's leading Internet companies.

Russia has more than 70 million internet users, about half of its population, and countless others attracted by neighboring Russian-speaking countries. The numbers are expected to increase because, as in many parts of the world, smartphone growth is bringing more people online. Now, Alibaba is moving in to make sure it is well positioned to take advantage of it.

Mail.ru, the Russian company that offers a range of Internet services, including social media, email and food delivery to 100 million registered users, has partnered with Alibaba to launch AliExpress. Russia, a joint venture that they believe will function as a "single destination" for communication, social media, shopping and gaming. Mailer.ru backer MegaFon, a telecommunications company, and the country's sovereign wealth fund, Russian Direct Investment Fund (RDIF), also invested undisclosed amounts in the new organization.

As a reminder, Alibaba – which launched its AliExpress service in Russia a few years ago – will hold 48% of the business, with 24% for MegaFon, 15% for Mail.ru and the remaining 13% for RDIF. In addition, MegaFon has agreed to exchange its 10% stake in Mail.ru with Alibaba in a transaction that alone is worth around $ 500 million. This would give the joint venture a valuation of about $ 2 billion.

This figure does not include other investments in the company.

"The parties will inject capital, strategic assets, leadership, resources and expertise into a joint venture that leverages AliExpress's existing Russian operations," Alibaba told Alizila.

Alibaba seems to have chosen his horse in the Internet race in Russia: Mail.ru [Image via KIRILL KUDRYAVTSEV/AFP/Getty Images]

The strategy, it seems, is to match Mail.ru's consumer services with AliExpress, Alibaba's international marketplace. This will allow Russian consumers to buy AliExpress products in China, but also other overseas markets such as Southeast Asia, India, Turkey Similarly, online sellers Russian consumers will have access to consumers in these markets. The "shopping center" of Alibaba – TMall – is also part of the AliExpress Russia offer.

This deal suggests that Alibaba chose his "horse" in the Russian internet race, just as he repeatedly supported Paytm – the company offering payments, e-commerce and digital banking – in India, with financing and integrations.

Alibaba has already stated that Russia is a "vital market for growth" of its Alipay mobile payment service. He did not provide rough numbers to confirm, but you can bet he will push Alipay the hard way with AliExpress Russia. Mail.ru's offer is called Money.Mail.Ru, but other reports say the joint venture will use the Russian national system, Mir.

"Most Russian consumers are already our users and this partnership will enable us to significantly increase access to various segments of the e-commerce offering, including cross-border and local merchants. The combination of our ecosystems allows us to leverage our distribution through our merchant base and products, as well as product integration, "said Mail.Ru Group. CEO Boris Dobrodeev in a statement.

Alibaba chairman Michael Evans said in Bloomberg's comments that Alibaba needed help from local companies to advance in Russia.

"A lot of what we have been able to develop so far in Russia has been our cross-border business. But the future, which will require the presence of our partners at this table, will involve the creation of a much larger local business, "he said.

This is the second strategic alliance MegaFon has concluded this year. She formed a joint venture with Gazprombank in May through an agreement that allowed her to offload five percent of her stake in Mail.ru. MegaFon acquired 15.2% of Mail.ru for $ 740 million in February 2017.

The agreement with Russia comes one day after the co-founder and executive chairman of Alibaba, Jack Ma – the public face of the company – announced its intention to withdraw over the next year. Current CEO Daniel Zhang will replace him as chairman, which means the company will also have to appoint a new CEO.