The strategic investment and cooperation agreement signal Farmmi’s active expansion into the distribution network of agricultural products.
Farmmi, Inc., an agriculture products supplier in China, recently announced its entry into a strategic investment and cooperation agreement, through its subsidiary Farmmi (Hangzhou) Enterprise Management Co., Ltd., with Sigma Holding (Hangzhou) Co., Ltd. (Sigma), and Hangzhou Xuyue Interactive Culture and Media Co., Ltd. (Hangzhou Xuyue) (collectively referred to as the Partners). The strategic investment and cooperation agreement signal Farmmi’s active expansion into the distribution network of agricultural products.
Given the rise of domestic community group purchasing, the last kilometer of the distribution of fresh food has become a major bottleneck and challenge. Professional distribution services for urban communities have emerged in response to benefit from the trend and to meet the higher demand. The market volume of the community group-buying market in China was estimated to be RMB 34 billion in 2019 and RMB 72 billion in 2020.
Farmmi, Sigma, and Hangzhou Xuyue are partnering and will jointly invest in the establishment of a new company as part of a 50-year agreement. The new company is committed to becoming a comprehensive service provider of community group purchasing distribution networks and will seek to benefit from continued broader market distribution trends.
Equity Arrangement
The partners, all based in Hangzhou City, Zhejiang Province, have agreed that the new company will initially have a total registered capital of RMB 20 million before September 30, 2021. Sigma has agreed to invest RMB 12 million, accounting for 60 per cent of the total registered capital of the new company. Farmmi has agreed to invest RMB 5 million, accounting for 25 per cent of the total registered capital of the new company.
