Benzinga | Jun 23, 2021 08:08AM EDT

Farmmi Reports RMB20M Strategic Investment From 3 Partners

* 3 Partners to Invest in the Creation of New Urban Distribution Company

* Strengthens Presence in Broader Agricultural Industrial Chain

* Target Overseas Capital Market Listing to Realize Investment Return

LISHUI, China, June 23, 2021 /PRNewswire/ -- Farmmi, Inc. ("Farmmi" or the "Company") (NASDAQ:FAMI), an agriculture products supplier in China, today announced its entry into a strategic investment and cooperation agreement (the "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 signals 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 community group-buying market in China was estimated to be RMB 34 billion in 2019 and RMB 72 billion in 2020. (Source: iiMedia Research) It is anticipated that the market volume will exceed RMB 1 trillion in 2023 as consumption habits take shape.(Source: Founder Securities)

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.

Ms. Yefang Zhang, Farmmi's Chairwoman and CEO, said, "We are partnering with two strong companies, which will give the new company the financial resources and expertise critical to a successful launch. We have conducted extensive market research and have a plan in place to ensure we move quickly and begin capturing our share of the large distribution opportunity. The 'last mile of delivery' poses a challenge to all the distribution platforms, represents a major opportunity for the launch of an urban distribution service for community group-buying. Fresh products, like fruits and vegetables, are the most prominent category in community group buying, which lays a solid foundation for us to embrace the distribution network of agricultural products. It is also in line with our strategy to expand into the whole agricultural industry chain. This deal is expected to strengthen the company's presence in agricultural supply chain and improve its profit."

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% of the total registered capital of the new company. Farmmi has agreed to invest RMB 5 million, accounting for 25% of the total registered capital of the new company. Hangzhou Xuyue has agreed to invest RMB 3 million, accounting for 15% of the total registered capital of the new company.