H.I.G. Capital Backs Inventus Power in Battery Consolidation Play

H.I.G. Capital has invested in Inventus Power, a Minnesota-based manufacturer of custom batteries and power supplies, betting that device makers across medical, industrial, and aerospace sectors will increasingly consolidate around fewer, more capable power partners. The investment — financial terms weren't disclosed — comes as OEMs face mounting pressure to secure reliable battery supply chains amid geopolitical tensions and tightening safety regulations.

The deal marks H.I.G.'s latest infrastructure play in the components space, following a pattern of backing specialized manufacturers that sit between commodity suppliers and end-product assemblers. For Inventus, the capital injection provides ammunition for an acquisition strategy targeting smaller battery shops that lack the engineering depth or regulatory expertise to serve increasingly demanding customers.

Founded in 2013 through the combination of two legacy power businesses, Inventus operates design and manufacturing facilities in the U.S., Mexico, China, and Taiwan. The company's customer roster includes medical device manufacturers requiring FDA-compliant battery systems, industrial equipment makers needing ruggedized power packs, and aerospace firms demanding batteries that meet stringent safety certifications. That multi-sector approach insulates Inventus from volatility in any single end market — a diversification play that likely appealed to H.I.G.'s investment committee.

"We're not trying to be everything to everyone," Inventus CEO David Ranhoff said in a statement. "Our focus is on customers who need a battery engineered specifically for their application — not an off-the-shelf cell you can buy from a catalog." That positioning, while narrower than lithium-ion giants like CATL or LG Energy Solution, places Inventus in a less commoditized segment where margins hold up better and switching costs run higher.

The custom battery and power supply market remains heavily fragmented, with hundreds of small-to-midsize shops serving regional customer bases or single industries. Many of these businesses were founded decades ago as OEMs brought power design in-house, then spun out those capabilities as standalone suppliers. The result: a landscape where technical competence varies wildly, regulatory compliance is inconsistent, and few players have the capital to invest in next-generation chemistries or automated manufacturing.

That fragmentation creates an opening for a well-capitalized consolidator. Inventus can acquire smaller competitors, migrate their customers onto standardized platforms, and cross-sell engineering services that mom-and-pop battery shops can't afford to staff. The playbook isn't novel — industrial distribution and component manufacturing have seen similar roll-ups over the past decade — but it works when the buyer brings operational rigor and the capital to fund working capital swings inherent in custom manufacturing.

H.I.G. Capital, with over $64 billion in assets under management across buyout, growth equity, and credit strategies, has run this play before. The firm's portfolio includes several industrial services and manufacturing businesses where the thesis centered on buy-and-build execution. In Inventus, H.I.G. is inheriting a platform with existing scale — the company operates multiple production lines and serves blue-chip OEMs — but enough whitespace to justify aggressive M&A.

What's less clear is how much organic growth Inventus can extract from its current customer base versus how much the investment thesis depends on deal flow. The company hasn't disclosed revenue figures or growth rates, which makes it difficult to assess whether this is a stable, slow-growth asset being levered up for acquisitions or a business with genuine top-line momentum that can support both organic investment and M&A simultaneously.

Inventus's positioning in medical devices and aerospace — two of the most regulated, risk-averse sectors for component sourcing — provides a degree of stickiness that pure industrial players lack. Medical device OEMs can't swap battery suppliers on a whim; doing so triggers revalidation processes that can stretch 12-18 months and cost millions in testing and regulatory filings. Aerospace customers face even steeper switching costs, with battery changes often requiring recertification at the platform level.

That lock-in effect means Inventus's revenue base is more durable than it would be if the company were primarily serving consumer electronics or automotive aftermarket customers, where price competition is brutal and customer loyalty is thin. It also means acquisitions in adjacent verticals — say, a battery supplier focused on handheld industrial tools or telecom backup power — can be integrated without cannibalizing the core medical and aerospace business.

The medical device angle is particularly timely. The FDA has been tightening oversight of battery-powered devices following a series of recalls tied to power system failures, and device makers are under pressure to demonstrate that their battery suppliers maintain rigorous quality management systems. Smaller battery shops often lack ISO 13485 certification or the documentation infrastructure to survive an FDA audit. Inventus, with existing certifications and a track record of regulatory compliance, can absorb those smaller players' customer lists while retiring their less-capable manufacturing operations.

In aerospace, the shift toward more-electric aircraft architectures — reducing reliance on hydraulic and pneumatic systems in favor of electric actuators and flight controls — is expanding the addressable market for high-reliability battery systems. Inventus isn't building propulsion batteries for electric aviation, but the proliferation of electric subsystems creates more opportunities for auxiliary power supplies and backup battery packs.

Inventus competes in a middle tier of the battery supply chain. Above it sit the vertically integrated giants — Panasonic, Samsung SDI, LG Energy Solution, CATL — that produce commodity cells at massive scale and serve automotive and consumer electronics OEMs. Below it are hundreds of small custom battery assemblers that buy cells from the giants, package them into application-specific packs, and serve local or niche customers.

Inventus's value proposition is that it bridges those two worlds. The company designs custom battery architectures, engineers power management circuitry, and manufactures the final assembly — offering OEMs a single throat to choke rather than forcing them to coordinate between a cell supplier, a pack assembler, and a power electronics vendor. For mid-market device makers without in-house battery engineering teams, that integrated approach reduces development time and lowers the risk of costly field failures.

The competitive set includes players like Ultralife Corporation, which focuses on defense and government applications; EaglePicher Technologies, concentrated in aerospace and medical; and a fragmented field of regional assemblers. None of those competitors has raised significant growth capital recently, which suggests Inventus could gain share simply by being better funded and more acquisitive.

The competitive landscape also includes emerging threats from battery management system (BMS) software companies and modular cell suppliers trying to standardize battery design. If OEMs can build batteries from plug-and-play modules with off-the-shelf BMS software, the value of custom engineering diminishes. Inventus's counter to that trend is depth of regulatory expertise and manufacturing scale that pure-play software or module vendors can't replicate.

One wrinkle in the investment thesis: Inventus operates manufacturing in China, which exposes the company to tariff risk and geopolitical supply chain anxieties. U.S. device makers — particularly in medical and defense-adjacent sectors — are under increasing pressure to source components from friendshored or domestic suppliers. That shift has already reshaped semiconductor packaging, rare earth processing, and EV battery supply chains; custom battery manufacturing is next.

H.I.G.'s investment thesis almost certainly includes an aggressive M&A component. The firm didn't back Inventus to run the business as-is; the goal is to double or triple revenue over a 4-6 year hold period, and organic growth alone won't get there. The custom battery market doesn't grow at 15-20% annually — it's a low-to-mid single digit grower unless you're taking share.

Expect Inventus to target acquisitions in three categories. First, tuck-ins — smaller battery assemblers serving the same end markets with overlapping customer bases. These deals are margin-accretive and low-risk; Inventus shuts down redundant facilities, migrates customers to existing production lines, and captures immediate cost synergies. Second, capability add-ons — companies with specialized battery chemistries, proprietary BMS software, or certifications Inventus lacks. These deals expand the platform's technical moat. Third, geographic expansions — European or Asian players that give Inventus closer proximity to customers in those regions.

The risk is that sellers in this space know the consolidation thesis and will price their businesses accordingly. If every founder of a $20-30 million battery shop thinks they're selling to a well-capitalized PE-backed buyer, multiples creep up and the returns on deployed capital deteriorate. H.I.G. will need to be disciplined — walking away from overpriced assets even if it slows the build-out.

Another challenge: integrating acquisitions without alienating the engineers and customer relationships that make those businesses valuable. Custom battery design is a relationship-driven, technically complex service. If Inventus acquires a competitor and immediately imposes standardized processes that undermine the acquired company's responsiveness or technical flexibility, customers leave. The best buy-and-build operators in component manufacturing move slowly on integration, keeping acquired businesses semi-autonomous until the cultural and operational kinks are worked out.

If the investment works, Inventus will exit H.I.G.'s hold period as the clear #2 or #3 player in custom batteries for medical and industrial applications, with revenue north of $500 million and a customer base diversified enough to attract a strategic buyer. Likely acquirers include global component conglomerates like TE Connectivity, Amphenol, or Molex — companies that already sell connectors, sensors, and power management products to the same OEMs Inventus serves and would value the opportunity to offer a bundled solution.

Alternatively, Inventus could go public, though the IPO window for industrial components businesses has been mostly shut since 2022. A dividend recap or secondary sale to another PE firm is more realistic in the near term if H.I.G. wants to crystallize a return before fully exiting.

This deal fits a broader pattern of PE firms targeting unglamorous, capital-light manufacturing and component businesses that benefit from secular tailwinds but fly under the radar of growth investors. Batteries aren't sexy. Power supplies don't generate TechCrunch headlines. But the companies that make them are critical infrastructure for everything from insulin pumps to satellite avionics, and they're structured in ways that make them attractive LBO candidates: recurring revenue, sticky customers, fragmented competition, and limited technological disruption risk.

H.I.G. Capital has built a reputation for this kind of deal. The firm's portfolio skews toward industrial services, niche manufacturing, and B2B services businesses that generate steady cash flow and can be improved through operational blocking and tackling. Inventus fits that mold perfectly — it's not a moonshot on unproven technology, but it doesn't need to be. The returns come from margin expansion, M&A execution, and riding the slow-but-durable growth in embedded electronics across mission-critical applications.

The challenge for H.I.G. is that every other middle-market PE firm has noticed the same opportunity. Component manufacturing, industrial distribution, and specialized services businesses have seen multiple expansion over the past five years as investors pile into defensive, cash-generative assets. That compression makes it harder to generate outsized returns unless the operational improvement and M&A execution are genuinely best-in-class.

Still, the custom battery market is fragmented enough, and Inventus's existing platform is strong enough, that there's room to build something meaningfully larger before the competitive set catches up. The question is whether H.I.G. can move fast enough to lock up the best acquisition targets before other buyers — strategics, other PE firms, or Inventus's direct competitors — start bidding up prices.

One underappreciated factor working in Inventus's favor: the post-pandemic, post-Ukraine obsession with supply chain resilience. OEMs that previously squeezed battery suppliers on price and played multiple vendors against each other are now prioritizing reliability, redundancy, and geographic diversification. That shift benefits suppliers like Inventus that can offer domestic or nearshore manufacturing alongside lower-cost Asian production.

Regulatory pressure is pushing the same direction. Medical device companies face scrutiny over single-source dependencies; aerospace OEMs are being pushed to qualify second sources for critical components; and industrial buyers are hedging against tariff and geopolitical risks by diversifying their supplier base. All of that creates opportunities for a well-capitalized battery supplier with multi-region manufacturing and the engineering depth to support new customer qualifications quickly.

H.I.G.'s investment in Inventus is a signal that mid-market PE firms see runway in component and subsystem manufacturing, even as the broader industrial economy faces headwinds. The bet is that mission-critical components — the unsexy parts that sit deep inside finished products — are insulated from macro volatility because device makers can't stop buying them without halting production entirely.

Expect more deals like this in adjacent spaces: power management ICs, connectors, sensors, thermal management systems, and other components that require custom engineering and regulatory compliance. These businesses don't scale like software, but they also don't collapse like software when the growth music stops. For PE firms managing LPs' expectations in a high-rate environment, that durability is worth paying for.

The other signal: buy-and-build is back in fashion after a rough 2023-2024 for M&A. Debt financing is more available, seller expectations have reset downward, and PE firms sitting on dry powder need to deploy capital. Platforms like Inventus that can credibly execute an acquisition strategy without relying on multiple arbitrage or financial engineering will get funded — even if the base business isn't a rocket ship.

What's notably absent from this deal announcement: any mention of sustainability, energy transition, or next-generation battery chemistries. Inventus isn't pitching itself as a clean energy play or a bet on solid-state batteries. It's a classic industrial consolidation thesis dressed up in the language of supply chain resilience and regulatory compliance. That's probably the right positioning — trying to sell this as a climate tech investment would stretch credibility — but it also means the exit multiples will be grounded in industrial comps, not frothy growth-stage valuations.

Still, there's a quiet sustainability angle here that neither H.I.G. nor Inventus is emphasizing: custom batteries designed for specific applications tend to last longer, fail less often, and generate less waste than cheap commodity cells jerry-rigged into applications they weren't designed for. If the circular economy and right-to-repair movements gain traction, OEMs that use well-engineered, repairable battery packs will have an easier time complying with extended producer responsibility regulations. That's not why H.I.G. invested, but it's a secondary tailwind worth watching.

No investment thesis is bulletproof, and Inventus faces several headwinds that could undermine the buy-and-build strategy. First, customer concentration: if a large portion of revenue comes from a handful of OEMs, losing one major customer or seeing one slash order volumes would crater growth assumptions. The company hasn't disclosed customer concentration metrics, which is a yellow flag.

Second, technological disruption. While custom battery design isn't prone to sudden obsolescence, the rise of standardized battery modules and open-source BMS platforms could commoditize parts of Inventus's value proposition. If device makers can assemble their own battery packs from off-the-shelf components with minimal engineering support, the premium Inventus commands for custom design work shrinks.

Third, integration risk. Rolling up small battery shops is messy. Production processes vary. Quality systems are inconsistent. Customers have personal relationships with founders who may not stick around post-acquisition. If Inventus can't retain the engineering talent and customer relationships that make acquired businesses valuable, the M&A strategy falls apart.

Fourth, geopolitical and tariff exposure. Inventus's manufacturing footprint in China and Taiwan creates vulnerabilities if U.S.-China tensions escalate or if tariffs on battery components spike. Reshoring production is expensive and slow; customers may not wait for Inventus to build out domestic capacity before shifting to competitors with existing U.S. manufacturing.

The first test of H.I.G.'s thesis will be whether Inventus announces an acquisition within the next 12-18 months. If the investment is genuinely about buy-and-build, the deal pipeline should already be active, and at least one tuck-in or capability add-on should close relatively quickly. If two years pass without M&A activity, it's a sign the integration or financing challenges are harder than expected.

Watch also for customer announcements and design wins. If Inventus lands new contracts with Tier 1 medical device or aerospace OEMs, it's evidence the platform is gaining share organically and isn't purely dependent on M&A for growth. Conversely, if the company goes quiet on customer wins, it suggests the business is mature and the growth story is entirely inorganic.

Finally, monitor broader component M&A. If other PE firms start bidding aggressively for battery assemblers, power supply manufacturers, or adjacent component businesses, it will drive up acquisition multiples and make Inventus's buy-and-build roadmap more expensive. The window for consolidating this market at reasonable prices may be narrower than H.I.G. expects.

For now, the thesis is plausible: a fragmented market, a well-positioned platform, and capital to execute. Whether H.I.G. can turn that into a genuinely outsized return depends on execution — the thing that separates average PE deals from the ones that actually work.