Coforge to acquire US-based AI firm Encora for $2.35 billion

Bengaluru: Tech services and solutions provider Coforge will acquire Silicon-based AI-native firm Encora for an enterprise value of about Rs 21,100 crore ($2.35 billion).

The transaction will be funded through a preferential allotment of equity shares representing an equity value of approximately $1.89 billion, pursuant to which Encora shareholders will hold approximately 20% of the expanded share capital of Coforge upon completion of the transaction, the Noida-headquartered company said on Friday.

Encora is founded with an AI‑native DNA, providing engineering services to Fortune 1000 enterprises and digital-native companies.

The firm operates at the convergence of AI, Cloud and Data, with capabilities spanning Intelligent Process Design, Agent‑Native Product Engineering, Core Modernisation, AI Foundation, Data Readiness, and AIOps, Coforge said. Coforge will acquire the business from Advent, Warburg Pincus and other minority shareholders.

Encora has built composable agentic AI platforms — AIVATM, and has deep partnerships with AWS, Microsoft, Google and Snowflake. This acquisition of Encora will create a $2.5 billion tech services powerhouse wherein AI-led engineering + Data + Cloud services alone are likely to deliver $2 billion revenue in FY27. AI led product engineering business is likely to be a $1.25 billion business, Cloud service is a $500 million business, and Data engineering is about a $250 million+ business for the firm.

Coforge also announced that its Hi-Tech and Healthcare industry verticals are expected to reach material scale immediately post-acquisition. They will both individually operate at an annualised $170 million+ revenue run rate.

The acquisition will reposition Coforge as a player with scaled near-shore delivery capability in LATAM with an engineering and AI Talent base of over 3100 SMEs servicing US Clients. It will significantly expand the West and Midwest US client footprint of Coforge, which, pre-acquisition, contributed only 25% to its US Geo revenues. The combined firm will have 45 $10 million+, highly scalable relationships. The combined business is expected to operate at an EBIT margin of 14%, and the acquisition is expected to be EPS accretive in FY27.

“The Encora acquisition is a defining moment for our organisation. It establishes a scaled AI-led engineering capability moat for the firm, underpinned by capabilities to help create enterprise data cores and cloud foundations purpose-built for AI. The new $2.5 billion firm, with a $2 billion enterprise core of AI-led Engineering, Data and Cloud services, will set the benchmark on making the promise of AI real for enterprises. With this augmented enterprise AI-led engineering core, we believe that our growth will get further accelerated and move to an even higher orbit,” said Coforge Ltd Chief Executive Officer and Executive Director Sudhir Singh.

Coforge has 33 global delivery centres and is present in 25 countries. Recently, many IT services firms have announced acquisitions aimed at expanding their ongoing Artificial Intelligence (AI) strategy. Tata Consultancy Services (TCS) and HCLTech have collectively spent over Rs 9,500 crore for acquisitions alone in the last two weeks.