Coforge to acquire Encora in $2.35B technology services deal – News

Information technology services provider Coforge Ltd. today announced plans to acquire rival Encora Digital LLC for $2.35 billion.

Coforge, which is listed on two stock exchanges in India, will finance the deal with shares. It will take out a bridge loan worth up to $550 million to refinance the debt on Encora’s balance sheet. Coforge is buying the company from a consortium that includes private equity firm Advent International, Warburg Pincus and other investors.

New Jersey-based Encora provides professional services that help enterprises enhance their technology infrastructure. Many of its services focus on artificial intelligence use cases. The company can help clients fine-tune large language models using internal datasets, turn those models into agents and connect the agents to their other applications.

Encora also competes in other parts of the technology services market. Companies can entrust it with tasks such as fixing quality and regulatory compliance issues in their business datasets. Additionally, Encora has a design team that specializes in creating user interfaces.

The company sells its professional services alongside a software platform called AIVA. According to Encora, the platform automates some of the manual work involved in managing AI agents. AIVA also ships with a library of pre-packaged agents that can automate tasks such as debugging code.

Coforge offers an AI platform of its own called Quasar. According to the company, the platform provides more than 100 application programming interfaces that developers can mix and match to build AI tools. There are also governance features designed to ensure that Quasar-powered workloads operate reliably.

The platform complements the IT services that account for most of Coforge’s revenue. The company helps customers develop AI applications, roll out productivity tools such as Microsoft 365 to their employees and make other technology upgrades. Beyond the IT market, Coforge helps organizations with non-technical tasks such as issuing mortgages and booking patient appointments.

“The Encora acquisition is a defining moment for our organization,” said Coforge Chief Executive Officer Sudhir Singh. “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.”

Coforge expects the acquisition to boost its North America business’ annual revenue by 50% to about $1.4 billion. Additionally, it stands to gain 11 large customers who spend more than $10 million per year on Encora services. The combined company will operate with an EBIT, or earnings before interest and taxes, margin of 19%.

The acquisition is expected to close within six months pending regulatory approval.

Photo of Coforge headquarters: Coforge