Coforge’s $2.35 bn Encora Takeover Makes it a $2.5 bn 'Tech Services Powerhouse'

IT services firm Coforge on Friday announced the acquisition of Silicon Valley–based Encora in a $2.35 billion deal, which CEO Sudhir Singh said will create a $2.5 billion “tech services powerhouse”. AI-led engineering, data and cloud services alone are expected to generate nearly $2 billion in revenue by FY27.

The transaction marks the largest takeover by an Indian IT company in the engineering research and development (ER&D) segment, the fourth-largest ER&D deal globally, and the second-largest acquisition ever by an Indian IT services firm.

The Noida-based company will acquire Encora from private equity firms Advent International, Warburg Pincus and other minority investors. Following the transaction, Encora’s shareholders will own about 21.25% of Coforge’s expanded equity base.

The acquisition will be executed through a share-swap arrangement, with Coforge set to issue 93.8 million equity shares at ₹1,815.91 apiece, translating into a non-cash deal value of roughly ₹17,032 crore.

Coforge has pegged the equity value of the acquisition at $1.89 billion, to be financed through a preferential share issuance priced at ₹1,815.91 per share, representing a 14.5% premium to Friday’s closing price.

The board has also approved plans to raise up to $550 million through a qualified institutional placement or other permitted routes. However, the company said a QIP may not be required if alternative funding arrangements are finalised.

What Coforge Gets from Encora

Encora, founded by Venu Raghavan, is led by CEO Anand Birje, a former HCLTech executive. He assumed leadership two years after private equity firm Advent International acquired a majority stake from Warburg Pincus in a $1.5 billion transaction. The company provides digital and software engineering services to technology-led industries and employs more than 9,000 people across over 40 offices and innovation centres spanning the US, Latin America, India and the Asia-Pacific region.

Encora reported consolidated revenue of $516 million in FY25 and is expected to reach $600 million in FY26, with an adjusted EBITDA margin of 19%. Coforge said the merged entity is likely to operate at an EBIT margin of around 14% after accounting for intangible amortisation, adding that the transaction will not be earnings-dilutive.

According to Coforge, the acquisition will significantly strengthen its HiTech and healthcare verticals, each projected to reach a run-rate of about $170 million post-merger. Encora brings AI-driven healthcare capabilities across pharma, medtech and healthtech, along with 11 clients contributing more than $10 million annually. This raises the combined number of such large accounts to 45.

Coforge said the combined entity is projected to generate around $2.5 billion in revenue, with close to $2 billion expected from AI-led engineering, cloud and data services by FY27. AI-focused product engineering alone could exceed $1.25 billion, while cloud services and data engineering are estimated to contribute about $500 million and $250 million, respectively.

“The Encora acquisition is a defining moment for our organisation. It establishes a scaled, AI-led engineering capability moat for the firm, underpinned by strengths to help create enterprise data cores and cloud foundations purpose-built for AI,” said Sudhir Singh, Chief Executive Officer and Executive Director, Coforge.

The acquisition aligns with Coforge’s broader expansion strategy focused on deepening its AI capabilities. The company has completed three acquisitions so far in 2025, following its 2024 purchase of Cigniti as part of its push to scale into a $2 billion business.

The deal also enhances Coforge’s nearshore delivery capabilities, with Encora adding more than 3,100 professionals across Latin America, while strengthening the company’s footprint in the US West and Midwest regions.

Post-acquisition, Coforge expects its North America business to expand by about 50% to exceed $1.4 billion.

Under the agreement, investors will be entitled to nominate two directors to Coforge’s board and gain representation on key committees, although management control will remain unchanged.

The transaction is subject to shareholder and regulatory approvals, including clearances from the Reserve Bank of India and overseas competition authorities, and is expected to close within four to six months.