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Mint
22-05-2025
- Automotive
- Mint
Bajaj sharpens international play as it takes full control of Austrian brand KTM via €800 million debt deal
New Delhi: Bajaj Auto Ltd is doubling down on its strategy to increase its international business as it acquired a controlling stake in the Austrian motorcycle company that sells motorcycles under the KTM brand. Under the transaction announced on Thursday, Bajaj will infuse €600 million into the company through debt funding, while €200 million has already been invested since FY2024, taking the total amount of the deal to €800 million ( ₹ 7,778 crore). The fresh infusion of funds is largely intended to pay off KTM's creditors and ensure the continuity of its business. The transaction was informed to the exchanges just 24 hours before the 23 May deadline on which the motorcycle brand was supposed to deposit €548 million ( ₹ 5,324 crore) it owed to creditors. Bajaj, through its Netherlands-based subsidiary Bajaj Auto International Holdings BV, has taken the entire stake in Pierer Bajaj AG (PBAG), increasing its shareholding from 49.9% earlier. The 49.9% stake in PBAG gave Bajaj indirect control of a 37% stake in KTM. This was because PBAG held 75% in the parent company of the KTM business, Pierer Mobility AG (PMAG). After the acquisition of the entire stake in PBAG, Bajaj's stake in KTM will be 75%. Notably, PMAG is listed on the Austrian stock exchange. 'Bajaj will shift gears from hitherto being a dormant minority investor to a majority owner in the global KTM company,' Bajaj told the exchanges. After witnessing a decline in sales due to a slowdown in the European premium motorcycle market, KTM filed for insolvency and applied for judicial restructuring proceedings in November 2024. The firm's restructuring plan was accepted by creditors on 25 February. Under it, creditors were supposed to receive 30% of their claims in a one-time payment by 23 May. As the deadline approached, the motorcycle brand needed funding to pay off its creditors. On 16 May, Bajaj announced in an exchange filing that it was receiving unsecured loans worth €566 million from three banks: JP Morgan Chase, DBS Bank and Citigroup Global Markets Asia Ltd. The purpose of the fundraiser was stated as the need for investment activities. At the end of the October-December 2024 period, Bajaj reported surplus funds of ₹ 15,000 crore on its balance sheet. After this fundraise, the company announced the acquisition of the entire KTM brand, which could help its presence in the global markets. As part of the deal, the company will provide KTM with debt funding worth €800 million, of which €200 million has already been infused via convertible bonds and loans in four tranches of €50 million between fiscal year 2024 (FY24) and April-May 2025. 'This twin move of taking ownership (subject to approvals) and paring down debt by providing liquidity at a crucial stage, positions Bajaj Auto as a driving force in shaping the future of one of the world's most admired high-performance motorcycle companies,' Bajaj's statement added. The remaining €600 million debt package will be distributed in two ways. First, €450 million will be given as a secured loan to KTM. Second, Bajaj's international subsidiary will subscribe to PBAG convertible bonds worth €150 million, which will subsequently be loaned to KTM's parent company. The Austrian court is scheduled to approve KTM's restructuring plan by mid-June, depending on the presence of enough cash in the firm's escrow account. After this, the payments to the creditors will be released. Following all approvals, Bajaj will be able to begin the revival of the KTM brand. The Pune-based company began its partnership with KTM in 2007 when it picked up a 14.5% stake for ₹ 300 crore. Over the years, this stake was increased to 49.9%. KTM's main plant is in Austria, while it has assembly plants in China, Brazil and the Philippines, among others. In 2023, all the facilities produced 380,000 bikes. In India, it uses the Bajaj-owned Chakan plant to produce vehicles for India and also exports to the world. KTM's motorcycles are exported to the US, Europe and Latin America, but its sales have significantly declined since it filed for insolvency in November. In the October-December period, KTM's exports dropped by more than 50%. This came at a time when Bajaj boosted its exports in FY25 as international sales made up for more than 41% of its total sales. In the last financial year, Bajaj's two-wheeler exports surged by 13% to reach 1.67 million units. In the domestic market, it sold 2.3 million units. Although the share of KTM in Bajaj's overall exports was, on average, around 5% before the problems started, the brand's bikes are important from a revenue and profit perspective. 'Had it not been for the short-term setback on KTM exports, our revenue growth would have been nearing double digit and Ebitda growth even much higher in the teens given the margin accretive business that it is,' Dinesh Thapar, chief financial officer at Bajaj Auto, said during the post Q3 results analyst call on 28 January. Ebitda is short for earnings before interest, taxes, depreciation and amortization. Analysts see the move as positive for the company, as the KTM business will once again start contributing to the margins. '[There is] potential for enhanced revenues, profitability and valuation uplift upon successful turnaround of KTM. [It] strengthens Bajaj's strategic global footprint, particularly in the high-performance and premium motorcycle segment,' Shridhar Kallani of Axis Securities wrote in a 22 May note. However, Kallani noted that there will be near-term pressure on the consolidated financials of the company, depending on the timing of funding and interest costs. Moreover, the key thing to watch for will be how Bajaj manages to turn around KTM's business, which suffered a slowdown due to the hit to the premium motorcycle market. In 2024, KTM sold 292,497 motorcycles, which was 21% lower than the 372,511 bikes sold in the year-ago period. 'In the near term, the company will have to do a strategic overhaul in order to initiate a turnaround of the KTM business,' Mrunmayee Jogalekar, auto research analyst at Asit C Mehta Investment Intermediates Ltd, said. Bajaj Auto's share price rose 0.7% on Thursday, compared with a 1% fall in the Nifty Auto index.
Time of India
22-05-2025
- Automotive
- Time of India
Hamara KTM: Bajaj Auto to take control of Austrian company
Bajaj Auto is set to take control of Austrian motorcycle manufacturer KTM in a deal valued at ₹800 million (₹7,800 crore), the Rajiv Bajaj-led company said in an exchange filing, marking its transition from minority investor to majority stakeholder . The Pune-based motorcycle and three-wheeler maker began its partnership with KTM in 2007, initially with a 14.5% stake. Bajaj Auto, which currently has a 37.5% holding indirectly, co-develops and manufactures KTM bikes at its Chakan facility. These are sold in India and exported to 80 countries. The move is part of a comprehensive strategy to revive KTM's operations and reposition the brand for global growth, the company said in the statement. The acquisition will be executed through Bajaj Auto International Holdings BV (BAIHBV), the company's wholly owned Netherlands-based subsidiary, which currently holds a 49.9% stake in Pierer Bajaj AG (PBAG), a joint venture with Austrian entrepreneur Stefan Pierer. PBAG in turn owns about 75% of Pierer Mobility AG (PMAG), the listed parent of KTM AG, Bajaj Auto said in the exchange filing on Thursday. The ₹800 million package includes ₹200 million already infused over the past year as shareholder debt and a fresh commitment of ₹600 million to fund KTM's ongoing debt restructuring. Of this, ₹450 million will be provided as a secured term loan to KTM AG, while ₹150 million will be channelled via convertible bonds through PBAG and PMAG. The funds are being used to meet a court-mandated 30% payout to creditors by May 23, 2025, an essential requirement to prevent KTM from slipping into insolvency. The deal is subject to regulatory approvals in Austria, including clearance from the Austrian Takeover Commission, Foreign Investment Control, and Merger Control authorities. Upon completion, Bajaj Auto will gain a controlling stake in PBAG, giving it operational control over KTM's global business. "This acquisition underscores our long-term commitment to the KTM brand and the premium motorcycle segment. We are taking a leadership role to ensure KTM not only survives but thrives," a Bajaj Auto executive said. KTM entered court-supervised restructuring in November 2024 amid liquidity issues. With creditor approval secured in February 2025, the onus is now on Bajaj to meet the funding deadline, unlock the restructuring process, and restart stalled operations. The Rajiv Bajaj-led company plans to overhaul the unit's governance structure, restart production, and deepen its joint development initiatives, especially in India, where the KTM bikes are developed and made. With this move, Bajaj Auto aims to position itself as a global leader in performance motorcycles and steer KTM through a critical turnaround as it looks to create long-term value and strengthen its presence in international markets, a strategy that its domestic rivals are also following.
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Business Standard
22-05-2025
- Automotive
- Business Standard
Bajaj Auto to acquire majority stake in KTM with €600 mn fresh infusion
Bajaj Auto Ltd on Thursday announced that it will become the majority owner of Austrian motorcycle brand KTM, strengthening its position in the premium motorcycle segment. The deal, subject to regulatory approvals, will be executed through its Netherlands-based wholly owned subsidiary, Bajaj Auto International Holdings BV (BAIHBV), which will provide fresh funding of €600 million to KTM AG, in addition to the €200 million already infused as shareholder debt to ensure continuity and support the revival of the Austrian brand's operations. KTM is known globally for its popular brands like KTM, Husqvarna and GASGAS. It was in November 2024 that KTM AG and its subsidiaries, KTM Components GmbH and KTM F&E GmbH, entered into a restructuring process, owing to liquidity challenges that could not service the spiralling debt and working capital constraints that stifled routine business operations. Later, on 25 February 2025, the creditors accepted the restructuring plan submitted by KTM AG, which provided for creditors to receive a cash quota of 30 per cent of their claims in the form of a one-time payment by 23 May. Simultaneously, Bajaj has arranged a debt funding package of €800 million to enable the continuity of the KTM business by paying off the approved quota to the creditors in furtherance of KTM's debt restructuring with the approval of the competent court in Austria and infusing funds into the company to revive its operations and working capital cycle. Of this total €800 million debt package, €200 million has already been infused into the company so far, and the balance €600 million is being done now. Through this, the Indian major will be acquiring a majority stake in Pierer Bajaj AG (PBAG), which indirectly owns KTM through Pierer Mobility AG (PMAG). BAIHBV holds a 49.9 per cent stake in Pierer Bajaj AG (PBAG) in Austria. The remaining controlling stake in PBAG is held by Pierer Industrie AG, owned by entrepreneur Stefan Pierer. PBAG holds a 75 per cent stake in its listed subsidiary, PMAG. PMAG is the holding company of KTM AG. Bajaj effectively holds a 37.5 per cent stake in PMAG/KTM through the above chain, prior to this transaction. 'Bajaj Auto intends to acquire a sole controlling stake in PBAG. The equity ownership realignment and change of control will, however, be brought into effect only after regulatory clearances,' the company said in a statement. The transactions were reportedly approved by Bajaj Auto's Audit Committee and will require shareholder approval through postal ballot. 'This twin move of taking ownership (subject to approvals) and paring down debt by providing liquidity at a crucial stage positions Bajaj Auto as a driving force in shaping the future of one of the world's most admired high-performance motorcycle companies,' the statement said. Simultaneously, a Pierer group company entered into loan and share pledge agreements with Dabepo Holding GmbH in December 2024 for an amount which, along with interest and costs, adds up to €80 million. Bajaj, through BAIHBV, has taken over the commitment under these agreements from Dabepo, to prevent the threatened foreclosure of this loan, which could impede the planned restructuring and ramp-up of the KTM business. Key milestones 1. On November 28, 2024, KTM AG applies for the initiation of judicial restructuring proceedings of KTM AG and its two subsidiaries. 2. On February 25, 2025, the creditors accepted the restructuring plan submitted by KTM AG. 3. This plan provided for creditors to receive a cash quota of 30% of their claims in the form of a one-time payment to be deposited with the restructuring Administrator by May 23, 2025. 3. On May 22, Bajaj Auto announces plans to acquire majority stake in the company via €800 million revival and restructuring plan 4. The Court will confirm the restructuring plan by mid-June 2025, post which the quota payment will be released to the creditors and the restructuring proceedings of KTM AG and its subsidiaries will be concluded with legally binding orders.
NDTV
22-05-2025
- Automotive
- NDTV
Bajaj Auto Moves To Take Control of KTM, Injects 800 Million Euros To Revive The Brand
In a bold step that signals a major shift in its global two-wheeler ambitions, Bajaj Auto is set to take control of the iconic Austrian motorcycle brand KTM. This strategic move comes through its Netherlands-based subsidiary, Bajaj Auto International Holdings BV (BAIHBV), and is aimed at rescuing and revitalising the debt-laden KTM group. Pending regulatory approvals, Bajaj will transition from a passive minority investor to the majority stakeholder in KTM's parent structure. The acquisition marks a turning point in Bajaj's near two-decade-long partnership with KTM, which has seen the Indian manufacturer play a pivotal role in developing, producing, and exporting KTM motorcycles from India to over 80 countries. The Deal: A Rescue Package and Ownership Shift To revive the struggling Austrian brand, Bajaj has arranged a comprehensive €800 million (approximately Rs. 7,200 crore) debt funding package. Of this, 200 million Euros have already been infused in tranches since FY2024 to maintain business continuity. The remaining 600 million Euros is now being deployed to fulfill creditor obligations and reboot operations. Out of this 450 million Euros will be a secured term loan by BAIH BV to KTM AG and the rest 150 million Euros will be issued as convertible bonds by PBAG and will be subscribed by BAIHBV, that will be loaned by PBAG to PMAG and the funds will be eventually used to pay off the balance amount of creditors' quota and restart costs. This financial intervention is part of a court-approved debt restructuring process in Austria. KTM and its key subsidiaries-KTM Components GmbH and KTM F&E GmbH-had entered a self-administration phase in late 2024, triggered by severe liquidity issues and operational bottlenecks. Key Milestones in KTM's Restructuring On November 28, 2024, KTM AG formally applied for judicial restructuring in Austria. On February 25, 2025, creditors approved the restructuring plan, which included a one-time 30 per cent cash payout to settle claims. The deadline for depositing this payout with the court-appointed administrator is May 23, 2025. If successful, the court will finalise the restructuring by mid-June 2025, paving the way for KTM's revival. To avoid a complete insolvency, Bajaj has now stepped in with the required liquidity. The funds will be placed into escrow accounts for creditor payouts, while production and supply chain activities, which had been halted, are set to restart. Structure of the Bajaj-KTM Transaction Bajaj Auto currently holds an indirect 37.5 per cent stake in KTM's listed parent, Pierer Mobility AG (PMAG), via a chain of investments. The planned acquisition will give Bajaj controlling interest in Pierer Bajaj AG (PBAG)-the Austrian holding entity that owns a 75 per cent stake in PMAG. Interestingly, Bajaj has also assumed responsibility for an 80 million Euros loan initially taken by a Pierer group company. This move prevented a potential loan foreclosure that could have jeopardised the entire restructuring plan. Once necessary approvals are in place, Bajaj plans to: Reconstitute the board and governance structure at KTM Launch a comprehensive turnaround strategy Expand the joint product development program between India and Austria Explore new partnerships to drive technology leadership and long-term growth With this decisive action, Bajaj Auto is positioning itself at the forefront of the global premium motorcycle segment. The move also reaffirms the Indian manufacturer's long-term commitment to KTM and its ambitions to shape the future of high-performance motorcycling in India and in other global markets as well.
Time of India
22-05-2025
- Automotive
- Time of India
Bajaj Auto to acquire controlling stake in KTM in €800 million deal
Mumbai: Bajaj Auto is set to take control of Austrian motorcycle manufacturer KTM in a deal valued at €800 million, the company said in an exchange filing, marking its transition from a minority investor to majority stakeholder. The Pune-based motorcycle and three-wheeler maker began its partnership with KTM in 2007, initially with a 14.5% stake. Bajaj Auto makes and sells KTM bikes. The move is part of a comprehensive strategy to revive KTM's operations and reposition the brand for global growth, the company said in the statement. The acquisition will be executed through Bajaj Auto International Holdings BV (BAIHBV), the company's wholly owned Netherlands-based subsidiary, which currently holds a 49.9% stake in Pierer Bajaj AG (PBAG)—a joint venture with Austrian entrepreneur Stefan Pierer. PBAG in turn owns about 75% of Pierer Mobility AG (PMAG), the listed parent of KTM AG, Bajaj Auto said in the exchange filing on Thursday. The €800 million package includes €200 million already infused over the past year as shareholder debt and a fresh commitment of €600 million to fund KTM's ongoing debt restructuring. Of this, €450 million will be provided as a secured term loan to KTM AG, while €150 million will be channelled via convertible bonds through PBAG and PMAG. The funds are being used to meet a court-mandated 30% payout to creditors by May 23, 2025, an essential requirement to prevent KTM from slipping into insolvency. The deal is subject to regulatory approvals in Austria, including clearances from the Austrian Takeover Commission, Foreign Investment Control, and Merger Control authorities. Upon completion, Bajaj Auto will gain a controlling stake in PBAG, giving it operational control over KTM's global business. KTM entered court-supervised restructuring in November 2024 amid liquidity issues. With creditor approval secured in February 2025, the onus is now on Bajaj to meet the funding deadline, unlock the restructuring process, and restart stalled operations. The Rajiv Bajaj-led company plans to overhaul KTM's governance structure, restart production, and deepen its joint development initiatives, especially in India, where KTM bikes are developed, made and exported to over 80 countries. With this move, Bajaj Auto aims to position itself as a global leader in performance motorcycles and signals its readiness to steer KTM through a critical turnaround, aiming to create long-term value and strengthen its presence in international markets.
