, USM, Megafon, RDIF and China's Ant Group sign binding documents on payments and financial JVs

Interfax, 12.02.2021

MOSCOW. Feb 12 (Interfax) - (MOEX: MAIL) Group, Megafon (MOEX: MFON), USM Holding, and the Russian Direct Investment Fund (RDIF) have signed binding documents with China's Ant Group to create a payments joint venture (PJV) and a financial services joint venture (FSJV). Group will be the largest shareholder in the PJV with a 40% stake. Group's contribution into the PJV will amount to 4.5 billion rubles in assets consisting of a 100% stake in non-bank settlement credit institution Money.Mail.Ru (LLC) and VK Pay payment system.

USM's contribution into the FSJV will include a 100% stake in ASK Renaissance, a 100% stake in Round Bank, a 100% stake in InPlat, other assets and cash. Group's contribution into the FSJV will be RUB 870 million in cash in exchange for a 5.95% stake in the FSJV.

Other shareholders including Ant Group, RDIF and MegaFon will contribute cash, assets or a combination of cash and assets into the FSJV and PJV.

The deals are expected to close in 2021 after satisfying a number of conditions including third party approvals. Upon completion, Russian shareholders will own the majority stakes in both the PJV and FSJV.

"The PJV and FSJV will work together to offer digital payment solutions and financial services designed to help people save money while spending it across the realm of the burgeoning e-commerce sector in Russia," the statement said.

Renaissance Capital analysts said that at this stage, the strategy of the partners in the JVs in terms of development of products and integration with different online and offline partners was not entirely clear. "There is already a relatively well developed banking system and digital payment system in Russia, while payments are already not an obstruction to the development of e-commerce," RenCap said in a review. Therefore, apart from intensified integration with AliExpress Russia, it is not clear to the experts which problems Group and its partners would be able to solve through the joint ventures or the motivation that these JVs could form for consumers to use VK Pay.

The creation of the PJV was announced in October 2019 - at that time the partners signed non-binding documents on the deal. The announcement followed the closing of a deal to create the e-commerce JV AliExpress Russia, co-owned by RDIF, Megafon, Group and Alibaba Group (the parent company of Ant Group).

Stakes in AliExpress Russia are now distributed as follows: Alibaba Group has just under 48%, Megafon has 24.3%, Group has 15% and the RDIF and its partners have 12.85%.