Coforge to acquire US-based Encora in $2.35 billion deal

Indian IT services provider Coforge said on Friday it would acquire artificial intelligence firm Encora at an enterprise value of $2.35 billion to ‌boost its in-house ‌AI capabilities and expand its presence in the U.S. and Latin America.

Indian IT firms are exploring funding ‌projects related to AI technology, potentially opening up a significant new revenue stream as the buzz around the field grows.

Encora, backed by Advent International and Warburg Pincus, offers AI solutions for product, cloud and data engineering, with Coforge estimating $2 billion in annual revenues by March 2027.


The combined entity is expected to operate ​at a margin of 14% before interest and taxes, with the acquisition ‌anticipated to be ‍EPS accretive by fiscal 2027.

The revenue coming in (from the ‍merger) would help Coforge leapfrog Persistent, Mphasis and Hexaware to ‌become India's seventh largest IT firm, said Pareekh Jain, founder of tech advisory firm EIIR Trend.

Coforge will fund the $1.89 billion equity value of the deal through the issue of preference shares at 1,815.91 rupees apiece, a 14.5% premium to Friday's close, while Encora shareholders will receive a 20% stake in the combined firm.

It plans to pay off the California-based company's debt through a ‍fundraising of up to $550 million, either through a bridge loan or a qualified institutional placement of Coforge shares.

The Indian firm, which derives ‍58% of its ⁠revenue from North and ⁠South America, will strengthen its presence in the West and Midwest U.S. through the acquisition, and gain access to Encora's workforce of approximately 3,100 employees in Latin America.

The company clocked revenues of 120.51 billion rupees ($1.34 billion) in fiscal 2025, up 32% from the previous year, while Encora registered a turnover of $516 million.

Coforge said the deal is expected to close in four to six months, and BDA Partners served as the investment banker for the transaction.