Russia’s sovereign wealth fund, RDIF, says it plans to set up a joint venture called AliExpress Russia JV, along with Alibaba, MegaFon–one of Russia’s telcos–and Mail.ru Group, one of the country’s leading internet companies. On its website, RDIF said that the deal has been approved by the country’s Federal Antimonopoly Service.

Alibaba will invest USD 100 million and will bring AliExpress Russia into the JV, which consists of Alibaba Group’s current Russia-based domestic and cross-border operations of the global AliExpress marketplace.

RDIF will invest USD 100 million into the AliExpress Russia JV and may further acquire additional shares of the joint venture from Alibaba for USD 194 million.

If RDIF does not exercise its option to buy the additional shares, it will hold 5% of economic rights and 1.2% voting rights of the JV while Alibaba will have 55.7% of economic rights and 49.9% voting rights of the JV. If RDIF fully exercises the option, its voting rights can be increased to 9.6%.

Mail.ru will contribute its Pandao e-commerce business and a cash investment of USD 182 million in exchange for 15.0% economic rights in the AliExpress Russia JV with 18.7% voting rights.  In addition to e-commerce, Mail.ru owns a wide portfolio, including the two largest Russian language social networks, VKontakte (VK) and Odnoklassniki (OK), as well as Pixonic, a mobile games developer, and ESforce, an eSports business.

MegaFon will sell its 9.97% economic stake in Mail.ru to Alibaba in exchange for a 24.3% stake in the AliExpress Russia JV with 30.2% voting rights.

Daniel Zhang, CEO of the Alibaba Group, said that the JV is well positioned to offer consumers in Russia and neighboring countries an innovative shopping experience by combining social platforms with commerce, as well as enabling regional brands and SMEs to sell their products locally and globally.

Contact the writer at jingli@kr-asia.com