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bne October 2018 Companies & Markets I 21
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Russian internet major Mail.ru in talks with Alibaba and RDIF
IntelliNews Pro
Russian internet major Mail.ru, its shareholder mobile operator MegaFon, and the sovereign Russian Direct Investment Fund (RDIF) are entering into a strategic partnership with Chinese e-commerce major Alibaba, Mega- Fon said in a press release on September 11.
The goal of the partnership is to "integrate Russia’s key consumer internet and e-commerce platforms and launch a leading social commerce joint venture in Russia and the CIS."
Russia's digital economy is booming, with the largest players developing ambitious marketplace and eco-systems projects, such as the joint venture between Sberbank and Yandex. Market, and another possible alliance of Chinese Alibaba with Russia's second-largest bank VTB Bank. VTB is affiliated with Russian Post that has just announced a number of measures to boost delivery infrastructure across 34 Russian cities and specifically with China.
According to other reports from the Eastern Economic Forum where the partnership was sealed, Mail.Ru Group may con- tribute its fast-growing market place Pandao to the JV. This confirms previous reports that RDIF and Alibaba are potential investors into Mail.ru Group's online commerce business.
Alibaba Group will reportedly have 48% stake in the joint venture, MegaFon 24%, Mail.ru Group 15%, RFDI 13%. Alibaba will merge its existing Russian business AliExpress and Tmall with the new venture, and contribute investment. RFDI will invest up to $300mn. MegaFon will swap 10% stake in Mail.ru for the 24% stake in the joint venture.
Renaissance Capital commented that a joint venture with Alibaba shows that "Mail.ru has been able to use its strategic and financial fire-power to disrupt the market over a fairly short period and end up with a stake in Russia’s leading e-commerce platform."
The analysts at RenCap believe the relationship with Alibaba could put Mail.ru in a strong position in other businesses,
including food delivery and classifieds, as well as lending significant credibility to the strategy put in place by company management. In the past few quarters Mail.ru margins were pressured by large investments in multiple segments, from e-sports, to food delivery, to the taxi market, and others.
"The possible cooperation between RDIF, Alibaba, and Mail will not come as a surprise to the market with respective dis- cussions ongoing for more than six months, and according to several sources, Alibaba and RDIF considering possible invest- ments into Russian e-commerce and logistics," Aton Equity commented on September 11.
Aton sees cross-border marketplace Pandao as "an alluring target" as it posted positive 2Q18 operating results with around 20mn total downloads and over 6mn monthly active users (MAU).
In May Mail.ru reshuffled its shareholder structure, now being co-owned by joint venture MF Technologies formed by MegaFon, Russia's third largest bank Gazprombank, and USM Holdings of billionaire and tech investor Alisher Usmanov.
“The goal of the partnership is to integrate Russia’s key consumer internet and e-commerce platforms and launch a leading social commerce joint venture in Russia and the CIS”
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