Cleary Gottlieb represented MegaFon in the creation of payment and financial services joint ventures with RDIF, Mail.ru Group, USM, and Ant Group.
The joint ventures will work to accelerate the development of Russia’s digital economy by upgrading the country’s digital payment and financial services for consumers. The deal will allow the major players of Russian and Chinese digital services markets to achieve synergies by consolidating their finance and payments assets under common control. The parties have agreed to merge, among others, their digital payment systems, a non-bank credit institution, and a bank. Mail.ru Group will hold a 40% stake in the payment joint venture, which is valued at RUB 4.5 billion, and a 5.95% stake in the financial services joint venture, which is valued at RUB 870 million and implies the total deal value of approximately RUB 25.9 billion or $350 million (at the current exchange rate).
The binding agreements were signed on February 11, 2021. This follows the signing of non-binding term sheets in 2019, when the parties first announced a partnership to promote financial inclusion in Russia.
The deals are expected to close in 2021 subject to a number of conditions, including third party approvals. Upon completion, Russian shareholders will own majority stakes in both joint ventures.
MegaFon is a pan-Russian operator of digital services, RDIF is a Russian sovereign wealth fund, Mail.ru Group is a major Russian internet company, USM is a diversified holding company and MegaFon’s parent, and Ant Group is the parent company of China’s largest digital payment platform Alipay.