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What To Know About Alibaba's Russian Joint Venture

What To Know About Alibaba's Russian Joint Venture

Chinese e-commerce giant Alibaba Group Holding Ltd (NYSE: BABA) as a natural progression, is scouting for inorganic growth. Russia, with its 70 million internet users, is too good an opportunity to pass for the Jack Ma-founded company. And what more, an investment here presents the potential to reach many more Russian speakers from neighboring nations.

Alibaba along with a consortium of investors, including the Russian Direct Investment Fund, or RDIF, a sovereign wealth fund, have received approved from the Russian Federal Antimonopoly Service, or FDA, to set up a joint venture, named AliExpress Russia, the RDIF said in a release.

About The Deal

The agreement to establish a JV was announced last September.

The AliExpress JV will be majority owned by Russian shareholders, with the supervisory board having representation from all the four partners. The JV will be managed by two co-CEOs, one nominated by Alibaba and another by Group (OTC: MLRYY).

"This JV is an important part of Alibaba's international expansion and step toward our goal of supporting 10 million small businesses reach profitability and serving 2 billion consumers around the world," said Daniel Zhang, CEO of Alibaba.

The JV aims at offering consumers in Russia and the neighboring countries an innovative shopping experience by combining social platforms with commerce.

Alibaba has consented to invest $100 million in the joint venture and RDIF will invest a similar amount, with the latter having the option to acquire additional shares of the JV from Alibaba for $194 million.

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