Coforge Gets Exchange Nod for ₹17,028 Crore Encora Deal

Introduction

Coforge Limited has reached a significant milestone in its bid to acquire US-based AI firm Encora, securing in-principle approval from Indian stock exchanges for its proposed preferential share issue. The approval, granted on April 10, 2026, is for a capital raise of ₹17,028.69 crore, which is essential for funding the landmark transaction. This development clears a major regulatory hurdle and moves the IT services company closer to finalizing what is set to be one of the largest acquisitions in the Indian IT sector.

A Landmark Acquisition in Indian IT

The deal involves Coforge acquiring 100% of Encora for an enterprise value of $1.35 billion. This transaction is not only the largest takeover by an Indian IT company in the engineering research and development (ER&D) segment but also the second-largest acquisition by an Indian IT services firm ever. The acquisition, first announced on December 26, 2025, is structured as an all-stock deal, signaling a strong belief in the combined entity's future value.

Strategic Rationale: A Push into AI and Global Expansion

The primary driver for this acquisition is to significantly enhance Coforge's capabilities in artificial intelligence and digital engineering. Encora, backed by private equity giants Advent International and Warburg Pincus, is a Silicon Valley-based firm specializing in AI-led solutions for product, cloud, and data engineering. The integration is expected to create a scaled AI-led engineering powerhouse. Furthermore, the deal will substantially expand Coforge's geographical footprint, particularly in North America, Europe, and Latin America, providing access to a broader client base and new markets.

Funding the Transaction

The acquisition is being financed through a share swap arrangement. Coforge will issue 93,796,508 equity shares on a preferential basis to Encora's existing shareholders. These shares are priced at ₹1,815.91 each, representing a premium over the market price at the time of the deal's announcement. Upon completion, Encora's sellers will hold a 20% stake in the expanded share capital of Coforge. The transaction also includes a provision to raise up to $150 million, either through a bridge loan or a Qualified Institutional Placement (QIP), to retire Encora's existing debt.

Navigating the Regulatory Maze

Since the announcement, Coforge has been systematically securing the necessary regulatory clearances across multiple jurisdictions. The company received Hart-Scott-Rodino antitrust approval in the United States on January 28, 2026. This was followed by shareholder approval through a postal ballot on February 28, 2026. The Reserve Bank of India (RBI) gave its nod for an Overseas Direct Investment (ODI) exceeding $1 billion on March 30, 2026. The latest approval from the stock exchanges marks the culmination of this rigorous regulatory process in India, paving the way for the final steps.

Financial Projections and Synergies

The combined entity is projected to have a strong financial profile. Coforge anticipates that the merged company will generate approximately $1 billion in annual revenue by March 2027. The acquisition is expected to operate at an earnings before interest and taxes (Ebit) margin of 14% and is projected to be earnings-per-share (EPS) accretive by the fiscal year 2027. In fiscal year 2025, Coforge reported revenues of $1.34 billion, while Encora recorded a turnover of $116 million, highlighting the significant scale the combined business will achieve.

Market Impact and Next Steps

The market has reacted positively to the steady progress of the deal. Following the RBI approval, Coforge's shares saw a notable rise of 3.8%. With the stock exchange approval now in place, the company is set to proceed with the formal closing of the acquisition. As per the terms, the closing must be completed within 15 days from the approval date of April 10, 2026. While a few other regulatory approvals in various international jurisdictions are still in advanced stages, this latest nod is considered the most critical one.

Conclusion

The in-principle approval from the stock exchanges is a pivotal moment for Coforge, effectively removing the last major obstacle to its acquisition of Encora. This transformative deal is poised to redefine Coforge's position in the global IT services landscape, equipping it with advanced AI capabilities and a significantly larger operational scale. As the company moves towards the final closure, all eyes will be on the successful integration of Encora and the realization of the projected synergies.