KTM AG is in a deep financial crisis and filed for bankruptcy in December last year. It even announced an emergency restructuring on November 29th 2024, and has since been trying to raise money to pay at least 30% of its colossal €2+ billion debt. It is currently undergoing Self-administration of insolvency. Now, the board of directors at Bajaj Auto Limited has decided to pump 150 million Euros (Rs.1,360 crore) into the Austrian brand. These funds will play a part in saving KTM from drowning.
150 million Euros have been released to Bajaj Auto's wholly-owned subsidiary, Bajaj Auto International Holdings BV (BAIH BV), Netherlands. This money is 'intended' to go towards BAIH BV's investment opportunities. The fresh capital will be provided as equity capital, preference capital or loans, depending on future requirements.
According to a recent exchange filing, Bajaj Auto Ltd. has extended €50 million in loan to KTM AG. "Bajaj Auto International Holdings BV has provided a loan of €50 million (equivalent to Rs 455.56 crore) to Pierer Bajaj AG to facilitate the funding needs of KTM AG as part of its ongoing restructuring process."
This loan will be used to fund KTM's operating costs and prepare for a phased resumption. Bajaj is doing this transaction within the framework set by KTM's bankruptcy administrator Dr. Peter Vogl, in Austria.
The exchange filing also states: "In the event that the conditions are not fulfilled, the said loan shall be immediately repaid back to BAIH BV,"
The New Capital Infusion: Details
Bajaj Auto International Holdings BV (BAIHBV) is a subsidiary of Bajaj Auto Ltd. It is based in the Netherlands and holds a 49.9% stake in Pierer Bajaj AG (PBAG) which controls nearly 75% of Pierer Mobility AG. This is the company that now owns KTM.
It remains to be seen if the capital infusion would make Bajaj Auto the biggest shareholder in KTM. Another possibility is that the KTM boss and Austrian businessman Stefan Pierer himself could chip in an equivalent amount- to maintain an equilibrium.
Bajaj And KTM Has An Ongoing Partnership
As you know, Bajaj Auto already has a manufacturing and marketing agreement with KTM. This was realised when KTM boss Pierer accepted investments from Bajaj Auto in 2007, igniting a major strategic partnership. Initially, Bajaj's stake was just 14.5%, which increased over the years. Licensing and manufacturing agreements came later.
Pierer had acquired KTM in 1992, when the brand was going bankrupt. With his vision, passion and strategies, he turned KTM into Europe's largest motorcycle manufacturer in the 2010s. Today, the Austrian brand has its products spread across various segments and price brackets. KTM also has its footprint in multiple international market including India and China as well.
BMW To Buy KTM? (Rumour)
Amidst the turmoil, the Austrian publication oe24 reported that BMW Motorrad could be interested in buying KTM. Oberbank, which is one of the major creditors of KTM, also prefers BMW Group as the potential buyer.
An insider familiar with the matter reportedly told oe24 that the acquisition could shift KTM's R&D to Munich and production to India. If this deal goes through, the KTM motorcycles would be made in India in association with TVS Motors.
Further specifics and details of this are yet to be known. A BMW representative even dismissed these as 'purely speculations' while talking to RideApart.