IT services company Coforge announced on Monday that it has received approval from the Reserve Bank of India (RBI) for an overseas direct investment (ODI) exceeding $1 billion, in a filing with the stock exchanges. This is part of the company’s plan to finalise its $2.35 billion acquisition of US-based AI solutions provider Encora.
The company has also secured approval for the deal in the US and in other markets, including Australia.
“A few other regulatory approvals required in various jurisdictions are currently in their advanced stages of processing,” Coforge stated. “The Company is actively monitoring these processes and will promptly update the stock exchanges as soon as these approvals are granted.”
According to a Reuters report last December, the deal is expected to close within four to six months.
Coforge anticipates the combined entity will generate $2 billion in annual revenue by March 2027. The acquisition is projected to operate at a margin of 14% before interest and taxes and is expected to be EPS accretive by fiscal year 2027. (A deal is EPS accretive if the additional earnings from the acquisition exceed the cost of funding it, so when profits are divided by the total shares, each share earns more than before.)
Encora, supported by Advent International and Warburg Pincus, provides AI solutions across the product, cloud, and data engineering domains.
Coforge plans to fund the $1.89 billion equity portion through the issue of preference shares at Rs 1,815.91 each, while Encora shareholders will receive a 20% stake in the merged company.
Debt owed by the California-based Encora will be cleared via up to $550 million in fundraising, either through a bridge loan or a qualified institutional placement of Coforge shares.
In fiscal year 2025, Coforge reported revenues of $1.34 billion, a 32% rise over the previous year, while Encora recorded $516 million in turnover, highlighting the scale and growth potential of the combined businesses.
The company has also secured approval for the deal in the US and in other markets, including Australia.
“A few other regulatory approvals required in various jurisdictions are currently in their advanced stages of processing,” Coforge stated. “The Company is actively monitoring these processes and will promptly update the stock exchanges as soon as these approvals are granted.”
According to a Reuters report last December, the deal is expected to close within four to six months.
Coforge anticipates the combined entity will generate $2 billion in annual revenue by March 2027. The acquisition is projected to operate at a margin of 14% before interest and taxes and is expected to be EPS accretive by fiscal year 2027. (A deal is EPS accretive if the additional earnings from the acquisition exceed the cost of funding it, so when profits are divided by the total shares, each share earns more than before.)
Encora, supported by Advent International and Warburg Pincus, provides AI solutions across the product, cloud, and data engineering domains.
Coforge plans to fund the $1.89 billion equity portion through the issue of preference shares at Rs 1,815.91 each, while Encora shareholders will receive a 20% stake in the merged company.
Debt owed by the California-based Encora will be cleared via up to $550 million in fundraising, either through a bridge loan or a qualified institutional placement of Coforge shares.
In fiscal year 2025, Coforge reported revenues of $1.34 billion, a 32% rise over the previous year, while Encora recorded $516 million in turnover, highlighting the scale and growth potential of the combined businesses.
