Coforge to acquire AI firm Encora in $2.35 billion deal to boost US, AI-led services play

IT services firm Coforge announced on December 26 it will acquire US-based AI-driven digital engineering company Encora from Advent International and Warburg Pincus for an enterprise value of $2.35 billion.  

The acquisition is expected to significantly bolster Coforge’s presence in the AI-led services segment and scale its business in North America by 50%, taking revenues in the region to over $1.4 billion. Encora is projected to reach $600 million in revenue in FY26, up from $516 million in FY25, with an adjusted EBITDA margin of 19%.  

“The combined entity will be a $2.5 billion tech services powerhouse, with scale and capability across AI-led engineering, Cloud, and Data services to drive enterprise-grade AI solutions,” Coforge said after its board approved the deal.  

The equity value of $1.89 billion will be funded via the issue of preference shares, giving Encora’s shareholders a 20% stake in Coforge. The remaining consideration will be met through a bridge loan or a qualified institutional placement (QIP) to repay Encora’s existing term loan. While the board has cleared raising up to $550 million via QIP or other routes, the company noted that QIP may not be triggered if alternative options are finalized.  

The deal is expected to immediately scale Coforge’s HiTech and Healthcare verticals, with each projected to achieve a $170 million run-rate. Encora brings AI-led solutions in pharma, medtech, and healthtech, as well as 11 client relationships generating over $10 million annually — raising the combined total to 45 such accounts.  

Encora also adds over 3,100 professionals across Latin America, enhancing Coforge’s nearshore delivery capabilities and expanding its reach across the US West and Midwest.    

Post-deal, Coforge projects combined revenue to hit $2 billion by FY27 and expects to maintain an EBIT margin of 14% after amortization of intangibles. The transaction, which is subject to shareholder and regulatory approvals in India and abroad, is likely to close in four to six months.