I Squared Capital has announced the signing of a definitive agreement to acquire a majority equity interest in ENTEK Technology Holdings LLC (“ENTEK”). ENTEK is recognized as a leading global manufacturer of battery separators, which are essential components in various battery technologies.
The agreement includes I Squared’s significant investment of $800 million, which will be complemented by a substantial loan of up to $1.3 billion from the U.S. Department of Energy’s Advanced Technology Vehicles Manufacturing (ATVM) program. This partnership underscores the vital importance of robust public-private collaborations in bolstering the U.S. domestic manufacturing capabilities of strategic technologies, particularly in light of the growing demand for electric vehicles and renewable energy solutions. Initial funding has already been provided, emphasizing the swift movement towards this essential project.
The primary focus of this investment is to finance the construction of a state-of-the-art gigafactory located in Terre Haute, Indiana. This facility will be the first and only of its kind within the United States to produce wet-process lithium-ion battery separators at scale. These separators are not only vital for electric vehicles but also play a crucial role in energy storage systems, defense equipment, and various components of digital infrastructure. Once the facility is fully operational, it is projected to create approximately 763 construction jobs and 635 permanent operational positions, thus significantly contributing to the local economy and job market.
Over the past four decades, ENTEK has developed a resilient and vertically integrated business model, leveraging its core competencies in energy storage, advanced materials development, and specialized equipment manufacturing. The firm has expanded its global footprint, operating in eight countries, and has pioneered the application of advanced materials to cover all battery separator types, including lead-acid, lithium-ion, and other emerging energy storage technologies. This vast expertise positions ENTEK as a leader in the battery separator market.
The company’s innovative and patent-protected wet process method for producing lithium-ion battery separators is specifically designed to ensure worker safety, protect surrounding communities, and minimize environmental impact. In addition to these benefits, the process provides significant regulatory and performance advantages. A substantial majority of ENTEK’s revenue is supported by long-term contracts, enabling the company to strategically scale its operations and capitalize on the burgeoning market opportunities within the U.S. battery sector. This is particularly relevant given the current uncertainties within the global battery supply chain and a policy environment that emphasizes the onshoring of strategic manufacturing capabilities.
The Terre Haute project will be executed in collaboration with Clayco, a reputable firm serving as the Engineering, Procurement, and Construction (EPC) contractor, and the Brueckner Group, a recognized leader in biaxial stretching equipment vital to the production process. The facility will have a remarkable production capacity, initially set to manufacture 1.4 billion square meters of wet-process lithium-ion battery separators annually during its first two development phases, with design plans to expand this capacity to 2.1 billion square meters in subsequent phases.
This level of production positions ENTEK uniquely in the marketplace, as it will be the only U.S.-based supplier capable of meeting the sourcing requirements that qualify battery manufacturers for the 45X production tax credits, aligning with the content stipulations under the Inflation Reduction Act (IRA) and the amendments introduced by the One Big Beautiful Bill Act (OBBBA). Such advantages will greatly benefit battery manufacturing customers seeking to maximize their credits under the OBBBA framework.
In connection with the Department of Energy’s loan of up to $1.3 billion, the project has successfully secured more than $200 million in 48C advanced manufacturing tax credits specifically for Phase One, and it will also become eligible for the ongoing 45X production tax credits during Phase Two, further enhancing the financial viability of the project.
The completion of this deal is anticipated to proceed following the necessary regulatory approvals, marking a significant milestone in the development of U.S.-based battery manufacturing capabilities and advancing the nation’s energy independence goals.
Advisors/counsel: William Blair served as the exclusive financial advisor for ENTEK. Troutman Pepper Locke and Holland & Knight served as ENTEK’s legal advisors. Kirkland & Ellis served as legal counsel for I Squared.
KEY QUOTES:
“For more than 40 years, ENTEK has built a reputation for innovation, quality, and long-term partnerships with the world’s leading energy storage and technology companies. With I Squared’s capital, strategic expertise, and global network, we will expand the U.S.’s manufacturing footprint, create high-quality jobs, and meet surging demand for batteries across critical applications, from EVs and energy storage to military defense equipment and data centers.”
Larry Keith, Chief Executive Officer, ENTEK
“ENTEK exemplifies the type of critical, high-growth infrastructure platform that I Squared seeks to scale. ENTEK’s revenues are underpinned by long-term agreements with blue-chip clients, and its products are essential to U.S. re-industrialization and energy security. With DOE support and rising demand in EVs, energy storage, and defense, ENTEK is uniquely positioned to deliver sustainable growth for our investors and the U.S. economy.”
Gautam Bhandari, Managing Partner and Chief Investment Officer, I Squared Capital
“This first-of-a-kind gigafactory, built right here in Indiana, will increase energy production and bring down prices, all while boosting our local economy and creating well-paying jobs for hard-working Hoosiers.”
Mike Braun, 52nd Governor of Indiana
“ENTEK’s new facility highlights Indiana’s continued leadership in advancing U.S. manufacturing, strengthening America’s competitiveness, and creating quality Hoosier jobs.”
U.S. Senator Todd Young (R-Ind.)
“Indiana continues to be a highly attractive place for businesses to invest, and ENTEK’s new factory is a strong testament to the power of investing in America’s security and competitiveness right here at home.”
U.S. Senator Jim Banks (R-Ind.)
