RDIF, Alibaba Group, MegaFon and Mail.Ru Group to Create a Social Commerce Joint Venture in Russia and CIS

Russian Direct Investment Fund (RDIF), Russia's sovereign wealth fund; Alibaba Group

(NYSE:BABA), world leader in e-commerce; MegaFon, all-Russian digital operator, and

Mail.Ru Group (MAIL:IL), Russian leading Internet and IT company that is now building up its

presence on foreign markets, have announced a strategic partnership resulting in the largest

social commerce joint venture in Russia and CIS aiming at integration of key consumer Internet

and e-commerce platforms in Russia.

The joint venture formed by this partnership will be partly based on the current AliExpress

business in Russia. The parties will consolidate strategic assets and invest new capital,

management, resources and expertise to create unprecedentedly favourable terms for retailers,

consumers and Internet users in Russia and CIS, as well as to speed up the growth of rapidly

developing Russian digital economy.

Terms of the deal and ownership structure of the joint venture:

● Alibaba Group will make its AliExpress business in Russia a part of the new joint

venture (JV) that will incorporate current local and cross-border operational assets of Alibaba Group in Russia, including the business of international e-commerce platform AliExpress and Russian B2C platform Tmall. Alibaba Group will further invest cash and

other resources into JV to maintain its functioning.

● RDIF will become a strategic shareholder of AliExpress Russia by acquiring a 13% share

through investing capital and buying an additional share of JV from Alibaba Group.

● MegaFon will sell its 10% share of Mail.Ru Group to Alibaba Group for a 24% share in

AliExpress Russia.

● Mail.Ru Group will transfer to JV its e-commerce business Pandao, cash and

distribution in the format of integration with Mail.Ru Group products. Its share in

AliExpress Russia will be 15%.

● AliExpress Russia and Mail.Ru Group will sign an agreement on strategic cooperation

that implies, among other terms, exchange of traffic and product initiatives.

As part of JV, the parties plan to expand the ecosystem and opportunities for everyday use of the service as a result of investment into other businesses together with Mail.Ru

Group, including FoodTech and other branches.

●

● After all transactions subject to customary closing conditions and respective corporate

approvals are finalized, AliExpress Russia will be owned by Alibaba Group (48%),MegaFon (24%), Mail.Ru Group (15%) and RDIF (13%). JV will operate in all sectors of

e-commerce, including cross-border and local market places as well as own direct sales.

Key strategic advantages of AliExpress Russia:

● Use of synergy of social services and commerce. Partnership with the leading Russian

Internet platform will open to AliExpress Russia the access to 100 million users of Mail.Ru Group in social networks, messengers, email service and online games. Access to this unique platform and users will give JV the opportunity to occupy a significant place in the value chain of Russian consumers’ lifestyle by creating a consolidated

platform for social communication, games and purchases.

● Increase of consumption in Russia. AliExpress Russia will reinforce the global

ecosystem of Alibaba Group offering the consumers a unique choice of high-quality

products with a wide price range from Russia, China and other countries.

● Support of SMEs in Russia. JV will create massive opportunities for Russian small and

medium businesses. They will gain access to a vast ecosystem that allows local entrepreneurs sell goods in their country and abroad. Alibaba platforms are used by over 600 million consumers; therefore, Russian SMEs will get access to the market that is four times bigger than the Russian population and includes consumers from China, Southeast

Asia, Turkey, Europe, India and other countries.

● Fostering the development of Russian digital economy. Due to the unique advantages

of each party of the agreement and their experience in e-commerce, social networks and digital media, logistics and working with local market, this partnership will speed up the development of digital economy in Russia and provide a foundation for long-term technological cooperation and building up the commerce infrastructure in Russia and in

the world.

Kirill Dmitriev, Chief Executive Officer, Russian Direct Investment Fund:

Michael Evans, President, Alibaba Group:

“RDIF is happy to announce the creation of this unprecedented partnership. The new company

will combine the advantages of Russian and Chinese businesses. This is a unique example of

technological cooperation of our countries. We hope that best technologies, experience and

possibilities will make JV the incontestable leader on the Russian e-commerce market offering

reasonably priced goods to Russian consumers and opportunities for the Russian business to

compete on the international market. Our investment is an example of RDIF leadership in the

digital transformation of Russia.”

Michael Evans, President, Alibaba Group:

“This partnership is a key stage of the international expansion of Alibaba. It will allow to cons

Sergey Soldatenkov, Chief Executive Officer, MegaFon:

“MegaFon is pleased to become partners with global technology leaders, Alibaba Group, RDIF and Mail.Ru Group. This agreement entirely complies with our digital strategy ‘Driving the digital world’ aimed at creating new opportunities for over 76 million clients. E-commerce seamlessly blends into our rapidly developing ecosystem of partner relations for best offers in finance, media and other client services. The partnership provides unprecedented access to the Russian consumer base, which is advantageous for all parties.”

Boris Dobrodeev, Chief Executive Officer (Russia) Mail.Ru Group: “

The deal is expected to be closed in the first quarter of 2019.

Reference Information

The Eastern Economic Forum

The Eastern Economic Forum is held annually with the objective of facilitating the accelerated development of the Russian Far East’s economy and expanding international cooperation in the Asia-Pacific region in accordance with the Executive order of the President of the Russian Federation No. 250 of 19 May 2015.

The 2018 Eastern Economic Forum will be held in Vladivostok from 11–13 September. Far Eastern Federal University’s (FEFU) campus on Russkiy Ostrov will serve as the forum’s venue.

The Official EEF Site: forumvostok.ru/en

olidate the leaders of the local market with our global ecosystem. By partnering with

Russia’s leading consumer internet platform, AliExpress Russia will help digitize and transform

the retail value chain in Russia, enabling a seamless and innovative experience for consumers as

well as creating significant opportunities for Russian entrepreneurs and SMEs to grow in their

home market and expand globally. Our experience in China and other markets around the world

makes us uniquely qualified to help build the future infrastructure of commerce in Russia and

neighboring countries.”

Mail.Ru Group is happy to become a strategic partner of AliExpress Russia: it will allow to

create a unique social e-commerce offer for our users. Together we will focus on development of

existing products as well as integration of products in social networks. Most Russian consumers

are already our users, and this partnership will enable us to significantly increase the access to

various segments of the e-commerce offering, including both cross-border and local merchants.

The combination of our ecosystems allows us to leverage our distribution through our merchant

base and goods as well as product integrations.”

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The Roscongress Foundation was founded in 2007 with the aim of facilitating the development of Russia’s economic potential and strengthening the country’s image by organizing international conventions, exhibitions, and public events. The Foundation develops substantive content for such events, providing companies and organizations with advice, information, and expert guidance, and offering comprehensive evaluation, analysis, and coverage of the Russian and global economic agendas. It offers administrative services and promotional support for business projects and helps to attract investment, including in the form of public-private partnerships.

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