India’s Coforge announces $2.35 billion Encora acquisition to scale AI capabilities

India’s Coforge on Friday announced a $2.35 billion acquisition of artificial intelligence solutions provider Encora, a move aimed at boosting its AI capabilities and widening its market reach across the United States and Latin America.

Indian IT services firms are increasingly finding themselves at the centre of a surge in demand for AI technology, as global companies explore funding new projects that could deliver substantial future revenues.

Encora, which is backed by Advent International and Warburg Pincus, provides AI-driven solutions in product, cloud and data engineering. Coforge estimates that the combined company could generate $2 billion in annual revenues by March 2027. The enlarged entity is expected to operate at a margin of 14% before interest and taxes, with the acquisition projected 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.

To execute the acquisition, Coforge will fund the $1.89 billion equity value through the issue of preference shares priced at 1,815.91 rupees apiece, reflecting a 14.5% premium to Friday’s closing price. As part of the transaction, Encora shareholders will receive a 20% stake in the combined business.

Coforge also plans to clear Encora’s debt, raising up to $550 million either through a bridge loan or a qualified institutional placement of Coforge shares. The IT major currently derives 58% of its revenues from North and South America. With this deal, it expects to strengthen its footprint across the West and Midwest regions of the U.S. while gaining access to Encora’s workforce of nearly 3,100 employees in Latin America.

For the fiscal year 2025, Coforge reported revenues of 120.51 billion rupees ($1.34 billion), marking a 32% increase from the previous period. Encora recorded revenues of $516 million.

Coforge said the acquisition is expected to close over the next four to six months. BDA Partners acted as the investment banker for the transaction.