IT hardware and ITeS firm Cerebra Integrated Technologies is diluting as much as 38% stake worth Rs 16.1 crore (~$ 3.5 million) as a part of share-for-vendor supply deal. Cerebra plans to enter e-waste management business and the company will use part of the value of shares issued for financing plant, machinery and services from three Singapore-based firms: Scenic Overseas, Leytron Technology and Cimelia Resource Recovery.

Incidentally, post preferential allotment, these three firms will together become foreign promoters of the company. Scenic Overseas with 14.8% stake will become the single largest shareholder of the listed company. Leytron Technology and Cimelia Resource Recovery will own 13.6% and 9.48% respectively.

The Indian promoter stake as of now is 5.2% that will shrink to 3.2% post allotment. Despite a high equity dilution the allotment will not trigger an open offer as any single firm will not acquire more than 15%, the trigger point for a mandatory public offer.

The shares are to be allotted at Rs 17.5 each, 3.5% premium to the closing price of Cerebra scrip on Monday.

Although barter deals are not uncommon in India, it is one of the rare cases specially for a listed company. In fact, the country’s largest media firm BCCL had been striking ad-for-equity deals for the last few years through a private treaties unit which functions as a private equity business buying equity stake in companies in lieu of advertisement space in its various print and electronic media vehicles.

Cerebra is looking at a three-phased strategy to enter the e-weaste management business. In the first phase it would get into repair, refurbishment & recycling of electronic boards and will set up a recycling plant. Thereafter it would set up a copper smelting plant and other base metal extraction plants and finally in the third phase it would set up plastic recycling unit through a plastic to fuel conversion plant.

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