I Squared's Strategic Move into the U.S. Tire Recycling Market: A Green Infrastructure Play with High Conviction

The U.S. tire recycling market is emerging as a cornerstone of green infrastructure and industrial decarbonization, with a projected value of $2.1 billion in 2025 and an expected surge to $3.7 billion by 2034 at a compound annual growth rate (CAGR) of 6.3%, according to a Dimension Market Research report. This growth is fueled by advancements in recycling technologies-such as pyrolysis and devulcanization-and the increasing demand for sustainable materials like crumb rubber and tire-derived aggregate (TDA) in construction and infrastructure projects, the report notes. For infrastructure investors like I Squared Capital, this sector represents a compelling intersection of environmental impact and financial returns.

Strategic Alignment with Green Infrastructure

I Squared Capital's environmental investment strategy is meticulously designed to capitalize on markets where decarbonization and resource efficiency converge. The firm's focus on mid-market acquisitions and platform development allows it to consolidate fragmented sectors, a model that aligns perfectly with the U.S. tire recycling industry, which remains highly decentralized, as noted on I Squared Capital's news page. By acquiring and scaling companies that specialize in waste-to-resource technologies, I Squared can position itself at the forefront of the circular economy.

While the firm has not yet made direct acquisitions in the U.S. tire recycling space, its recent investments in related sectors underscore its strategic intent. For instance, its acquisition of VLS Environmental Solutions in 2022-a North American leader in industrial waste management-demonstrates its commitment to scaling sustainable infrastructure. Similarly, its 2025 acquisition of ENTEK, a U.S.-based manufacturer of lithium-ion battery separators, highlights its focus on industrial decarbonization and reshoring critical manufacturing. These moves suggest a broader playbook: leveraging existing expertise in waste processing and energy transition to enter adjacent markets like tire recycling.

Market Dynamics and I Squared's Opportunity

The U.S. tire recycling market is driven by regulatory tailwinds and technological innovation. Government mandates to reduce landfill waste, coupled with incentives for recycled material use in infrastructure (e.g., rubber-modified asphalt), are creating a fertile ground for investment, the Dimension Market Research report observes. For example, the Tire Recycling Foundation (TRF)-a 2024 initiative by the U.S. Tire Manufacturers Association (USTMA) and the Tire Industry Association (TIA)-aims to achieve 100% circularity for end-of-life tires by 2030 (Tire Recycling Foundation). Such industry-wide efforts are likely to attract capital from firms like I Squared, which prioritize partnerships with organizations advancing ESG goals, as described on I Squared Capital's sustainability page.

Moreover, I Squared's platform development approach-building scalable infrastructure from small bases-could address a critical gap in the tire recycling sector. Many existing recyclers lack the capital to adopt advanced technologies like automated sorting or pyrolysis, which yield higher-value outputs, the report notes. By injecting capital and operational expertise, I Squared could transform mid-market players into industry leaders, mirroring its success in wastewater treatment and renewable energy.

Risks and Mitigation

Despite the optimism, challenges persist. The tire recycling market is sensitive to fluctuations in raw material prices and regulatory changes. However, I Squared's emphasis on long-term, stable cash flows-a hallmark of its infrastructure investments-positions it to navigate these risks. Its experience in managing complex regulatory environments, demonstrated through prior transactions such as its Enva acquisition in the UK, is detailed on I Squared Capital's strategies page, and further strengthens its ability to scale operations in the U.S.

Conclusion: A High-Conviction Bet on Decarbonization

The U.S. tire recycling market embodies the dual imperatives of environmental sustainability and industrial modernization. For I Squared Capital, the sector offers a unique opportunity to deploy its platform strategy in a high-growth, mission-critical industry. While direct acquisitions in tire recycling have yet to materialize, the firm's existing portfolio and strategic focus on decarbonization suggest it is well-positioned to act swiftly as the market evolves. Investors with a long-term horizon may find this alignment of I Squared's capabilities and the sector's potential to be a high-conviction opportunity.