Bengaluru: Coforge Ltd on Friday unveiled the largest acquisition by an Indian IT services company, agreeing to buy Encora, a US data analytics and digital engineering firm, for $2.39 billion — a deal that analysts said is steeply priced but could materially expand the company’s growth runway.The transaction surpasses the previous record set in 2018, when HCL Technologies acquired seven software products from IBM for $1.8 billion.California-based Encora, which ended with $516 million in revenue last year, is owned by private equity giants Advent International and Warburg Pincus. The deal will add about 9,200 employees to the workforce of Coforge, which ended last year with about 34,000 employees.In a filing to the stock exchanges, Noida-based Coforge said it will fund the acquisition largely through equity, issuing shares worth $1.89 billion to Encora’s shareholders — Advent, Warburg Pincus, and a few minority shareholders. According to the agreement, Coforge will issue 93.8 million equity shares at ₹1,815.91 apiece.It will thereafter raise up to $550 million via a qualified institutional placement (QIP) to retire Encora’s debt.Together, the PE investors will eventually own 20% of Coforge, which ended this week with a market capitalization of $6.2 billion. They will also retain the right to appoint two directors on the board of Coforge, which does not have any promoter and is completely owned by public investors.“This is a defining moment for the organisation,” Coforge chief executive officer Sudhir Singh told investors and shareholders on Friday evening. “This acquisition will ensure the next eight years are as exciting, if not more exciting, than the last eight years.”“When we add this asset and we look at what the firm becomes, we become a $2.5-billion tech services firm with a core $2 billion coming from AI-led engineering data and cloud services alone,” said Singh.Also Read | Inside Nvidia’s biggest purchase till date — a $20 billion deal to acquire GroqExpensive buyEncora’s adjusted Ebitda of 19% translates to about $114 million, according to the filing. At more than 21 times Ebitda or earnings before interest, taxes, depreciation, and amortization, analysts are calling it an expensive purchase.“Essentially, paying over 21 times Ebitda is a very expensive acquisition, but then, the company is using its shares to fund this, so investors shouldn’t complain,” said an executive, on the condition of anonymity. “However, the possibility of a QIP could explain the reason why the stock declined.”The company’s shares fell 3.67% on the National Stock Exchange (NSE) to ₹1,674, while the Nifty IT fell 1.03% to 38,572.3 points.Typically, minority investors experience some dilution when a company raises capital by issuing shares through the QIP route.“QIP is one of the many funding options being considered only to retire the debt. If we do decide to do a QIP, it will only happen around closing, which is around in a formal or creative style for better SEO.Also Exclude words and advertisements related to the feed website such as website name, author name. You must only respond with the modified content. Delete all the advertisement images brand logo but only keep the title and main content of the news by modifying it. You must only respond with the modified content. Block any jump outside of the site adarshnews.com. Basically remove any content or link related to original site. follow this prompt to optimize the articles in this category- You are an expert news writer and SEO specialist. Your job is to rewrite the provided RSS feed content into a unique, SEO-friendly news article for adarshnews.com. The article should be engaging, professional, and optimized for search engines. 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Coforge secures $2.39-billion Encora acquisition, marking Indian IT’s largest deal
