I Squared Capital Buys Majority Stake In ENTEK For $800 Million

I Squared Capital has signed an agreement to acquire a controlling interest in ENTEK Technology Holdings LLC, a longstanding producer of battery separators used across electric vehicles, grid storage, and other high-reliability applications. The investment totals $800 million and is paired with a conditional loan of up to $1.3 billion from the U.S. Department of Energy’s Advanced Technology Vehicles Manufacturing program—an anchor of federal efforts to scale domestic clean energy manufacturing.

First U.S. Gigafactory for Wet-Process Lithium-Ion Separators

At the center of the deal is ENTEK’s planned gigafactory in Terre Haute, Indiana, which will be the first U.S. facility to make wet-process lithium-ion battery separators at scale. These ultra-thin membranes are critical for safety and performance in modern batteries, acting as the barrier that allows ions to move while preventing short circuits. Their role spans EV packs, stationary storage, defense systems, and digital infrastructure.

The project is expected to deliver significant regional benefits: roughly 763 construction jobs and 635 long-term operating roles once the plant is fully ramped. Engineering, procurement, and construction will be led by Clayco, while the Brueckner Group will supply biaxial stretching technology—the heart of the separator manufacturing line. Initial phases are designed to produce about 1.4 billion square meters of separator annually, with plans to expand capacity to approximately 2.1 billion square meters in later phases.

Federal Incentives and Domestic Content Tailwinds

The financing stack reflects today’s industrial policy priorities. In addition to the ATVM loan, the project has secured more than $200 million in 48C advanced manufacturing tax credits for Phase One and is expected to qualify for 45X production credits during Phase Two. Together, these incentives are intended to lower the cost of U.S.-made battery materials, accelerate deployment, and fortify the supply chain against geopolitical disruptions.

As the only U.S.-based producer targeting large-scale output of wet-process lithium-ion separators, ENTEK is positioning its customers to meet domestic-content requirements tied to Inflation Reduction Act incentives. That advantage is increasingly pivotal for battery manufacturers seeking to maximize federal support while localizing their supply base.

ENTEK’s Technology, Track Record, and Market Fit

ENTEK brings four decades of experience in energy storage materials and specialized equipment manufacturing. The company operates across eight countries and supplies separators for multiple chemistries, including lead-acid and lithium-ion. Its manufacturing platform is vertically integrated, and management reports that a substantial majority of revenue is backed by long-term agreements with tier-one customers—an important foundation for scaling a capital-intensive business.

The firm’s wet-process method for lithium-ion separators is covered by a portfolio of patents and is engineered to reduce environmental impacts, prioritize worker safety, and meet stringent regulatory standards. As battery producers push for higher energy density and improved safety margins, wet-process separators have gained traction for their consistency and performance, particularly in EV and long-duration storage applications.

Reshoring Batteries, Cutting Risk

For the broader clean energy transition, this deal signals a continued shift toward building end-to-end battery supply chains inside the United States. Moving separator production onshore helps cut logistics emissions, shortens lead times, and provides more control over quality and compliance—key variables for automakers and grid operators managing growing fleets of batteries.

Demand pressures are relentless: EV sales continue to expand, utilities are procuring more storage to balance variable renewables, and critical industries are electrifying backup and mission-critical systems. Domestic capacity in core components like separators reduces exposure to bottlenecks that have previously slowed clean energy projects or raised costs for consumers.

Local Impact and Next Steps

Indiana’s manufacturing ecosystem remains a draw for large-scale projects, and the ENTEK facility is expected to ripple benefits through regional suppliers, training programs, and related services. Beyond job creation, it enhances the Midwest’s role in the nation’s energy transition by anchoring a key link in the battery materials chain.

Completion of the transaction is subject to regulatory approvals. Advisors on the deal include William Blair as exclusive financial advisor to ENTEK; Troutman Pepper Locke and Holland & Knight as legal advisors to ENTEK; and Kirkland & Ellis as legal counsel to I Squared.

Why It Matters

From an ecological and energy-security perspective, scaling domestic separator production reduces the environmental footprint of supply chains and provides a platform for continuous process improvements—lowering waste, enhancing recyclability, and improving safety. Strategically, it aligns U.S. industrial capacity with the policy and market realities of the next decade, where electrification and storage will underpin transportation, power, and data resilience. With this move, I Squared and ENTEK are betting that the backbone materials of the battery era belong closer to home.