Alibaba Teams Up with Russia
Chinese e-commerce giant Alibaba Group Holding Ltd. agreed to take a 10% stake in one of Russia’s biggest tech players—a commercial tie-up that comes as both countries move to strengthen geopolitical bonds. The stake in Mail.Ru Group Ltd., one of Russia’s earliest and most prominent internet firms, would be worth about $484 million, based on Mail.Ru’ s market valuation Monday. The company’s global depositary receipts, traded in London, finished almost 12% higher Tuesday after the deal was disclosed.
The transaction is part of a broader venture, unveiled Tuesday on the sidelines of a China-Russia summit, aimed at creating what Alibaba and its new Russian partners say will be the biggest online-shopping platform in the country.
The investment is modest for Alibaba and targeted at a relatively small e-commerce market. Still, it represents an unusually high-profile strategic partnership between Chinese and Russian tech giants. Both Alibaba and Mail.Ru have been instrumental in building local alternatives to the Western-built internet, dominated by U.S. tech titans like Facebook Inc. and Amazon.com Inc.
Mail.Ru started out in the late 1990s as a simple email service but has grown to be a colossus of the Russian internet. It owns Russia’s most popular social network, Vkontakte. Through Vkontakte and other social networks and platforms, Mail.Ru claims it reaches 90% of Russia’s internet users at least once each month.
“It’s a great example of cooperation between Russia and China because we are doing a lot of investments together but technology is a great new frontier and we want to pursue it together,” Kirill Dmitriev, the chief executive of the Russian Direct Investment Fund added.
The deal with Alibaba made sense, he added, because the firm was already invested in Russia and was growing there. “It’s growing 50 to 70 percent a year and taking the highest market share in e-commerce in Russia. (It has) 600 million customers that some of the Russian businesses can supply products to. Mail.ru, which is our partner with us in this deal, has 100 million Russians who will get more Alibaba products.”