Private equity major Advent International has acquired a majority stake in Encora, a global digital engineering services company, for $1.5 billion.
As part of the agreement, Warburg Pincus, the existing majority shareholder of Encora, has sold its stake and now retains a minority stake.
“We are thrilled to enter into this partnership with Advent as we continue to scale our differentiated software engineering service offerings,” said Venu Raghavan, chief executive officer, Encora. “Advent’s deep business and technology services sector expertise, along with its global footprint, complements Encora’s strengths and creates opportunities to grow our business in key markets around the world.”
Encora is an established leader in outsourced software product development services, using deep technical expertise in machine learning, AI, data science, cloud services and other next-generation digital engineering disciplines to accelerate strategic innovation for tech-enabled companies that market proprietary software products drive position and growth.
The deal signifies some of the M&A activity and demand for companies in the product engineering services space. Earlier this year, Hitachi had acquired GlobalLogic in a $9.6 billion deal, one of the largest deals in the engineering & research and development space.
The E&RD space has, in recent times, become a significant focus for prominent players as engineering is a key component in the digital transformation story. The digital segment is digital or software product engineering, which is the backbone of all software platform development and digital plumbing. The physical segment is Industry 4.0, which is driving transformation in manufacturing and asset-intensive industries. Not being present in these sectors means providing total solutions and relinquishing your key customers to other competitors.
Since rebranding as Encora in 2020, the company has expanded its focus within the consumer tech and enterprise tech sectors and grown its global talent pool to over 6,300 associates across 40 global offices across LatAm, India, APAC and the US.
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“We have seen tremendous growth in the digital technology services sector over the past few years, as the need for strong technology products has escalated across industries,” said Shweta Jalan, managing director at Advent.
Jan Janshen, the managing partner at Advent, also said, “we believe Encora is well-positioned to capitalise on the growing digital services market, and we are excited to partner with Venu, Encora’s talented management team, and Warburg Pincus to support the company’s growth in key markets across North America, Europe, India, Asia Pacific and Latin America, where Advent has a strong presence and domain expertise.”
This new partnership enables Encora to accelerate its global growth, both organically and through targeted M&A opportunities, expand its differentiated delivery model and advance its customer-facing digital services. Encora focuses on serving the software and digital engineering needs of enterprise SaaS companies, mid-market technology companies, and large enterprises.
With $81 billion in assets as of June 30, 2021, Advent has invested in over 380 companies across 42 North America, Europe, Latin America, and Asia. It has significant investment experience in both the business and technology services sectors and in the key markets where Encora operates.