Coforge-Encora deal: IT firm to acquire AI player Encora for $2.35 bn; PE investors to hold one-fifth stake

IT services firm Coforge on Friday announced the acquisition of Silicon Valley-based AI firm Encora in an all-stock deal valued at $2.35 billion (about Rs 21,133 crore), marking one of the largest overseas acquisitions by an Indian mid-tier IT company, PTI reported.The acquisition will be funded entirely through equity, with Coforge issuing preferential shares worth about $1.89 billion to Encora’s existing shareholders, including private equity firms Advent International and Warburg Pincus. On completion, the sellers will collectively hold about 20% of Coforge’s expanded share capital, the company said in a regulatory filing, according to PTI.“Coforge has signed a definitive agreement to acquire 100 per cent shares of Encora from Advent International, Warburg Pincus and other minority shareholders. The enterprise value of the transaction is $2.35 billion,” the company said.Coforge CEO and executive director Sudhir Singh said the acquisition strengthens the company’s AI-led engineering capabilities. “The acquisition establishes a scaled AI-led engineering capability moat for Coforge, underpinned by capabilities to help create enterprise data cores and cloud foundations purpose-built for AI,” Singh said.Encora, an AI-native software engineering services firm, is projected to report revenue of about $600 million in FY26, with an adjusted EBITDA margin of nearly 19%.Following the acquisition, Coforge said the combined entity will form a $2.5 billion technology services platform, with AI-led engineering, data and cloud services together expected to generate nearly $2 billion in revenue by FY27.“AI-led product engineering business is likely to be a $1.25 billion-plus business, Cloud services a $500 million business, and Data engineering a $250 million-plus business,” the company said, adding that its hi-tech and healthcare verticals are expected to scale up to annualised revenues of over $170 million each immediately after the transaction.According to the filing, the transaction will also involve a bridge loan or a qualified institutional placement of up to $550 million to retire Encora’s existing debt.The deal has been agreed at a share price of Rs 1,815 per share, representing a premium of about 8.5% to Coforge’s closing price on Friday.