Bajaj Auto moves to gain control of KTM amid restructuring efforts

New Delhi: Bajaj Auto Limited, through its wholly owned subsidiary Bajaj Auto International Holdings BV (BAIHBV), has announced its intention to acquire a controlling stake in the Austrian-headquartered KTM business, pending regulatory approvals. The move is aimed at transitioning from its current minority position to majority ownership within the global KTM company.

Currently, KTM operations in India function under a joint development agreement, through which the motorcycles are manufactured, marketed domestically, and exported to over 80 countries. Bajaj plans to expand this collaboration, while aligning governance and financial strategy at the global level.

To support the restructuring of KTM, which has been undergoing a self-administered insolvency process since late 2024 due to liquidity constraints, BAIHBV has put together a debt financing package amounting to EUR 800 million. This includes EUR200 million already deployed in phased tranches and an additional EUR 600 million now being disbursed.

Background and ownership structure

Bajaj Auto International Holdings BV (BAIHBV), registered in the Netherlands, holds a 49.9% stake in Pierer Bajaj AG (PBAG), a holding entity based in Austria. The remaining stake in PBAG is owned by Pierer Industrie AG, led by Stefan Pierer. PBAG in turn holds approximately 75% of Pierer Mobility AG (PMAG), the listed parent of KTM AG.

KTM AG is the manufacturer behind brands including KTM, Husqvarna, and GASGAS. Through its current indirect holding, Bajaj Auto has an effective interest of around 37.5% in PMAG.

KTM’s restructuring process

In November 2024, KTM AG and its subsidiaries KTM Components GmbH and KTM F&E GmbH entered a judicial restructuring process under Austrian law, due to rising debt and working capital issues. On 25 February 2025, creditors approved a plan that entailed a one-time payment of 30% of their claims, contingent upon the availability of liquidity by 23 May 2025. If the required funds were not deposited by that date, the restructuring would revert to formal insolvency.

Bajaj’s recent funding enables the administrator to deposit the necessary funds in escrow, fulfilling this key condition of the restructuring.

Transaction details

To ensure continuity, BAIHBV initially provided EUR 200 million in shareholder loans during FY24 and early FY25. These were disbursed in four tranches of EUR 50 million via convertible instruments.

The newly committed EUR600 million includes:

• EUR 450 million as a secured term loan from BAIHBV to KTM AG.
  
  

• EUR 150 million in convertible bonds issued by PBAG, to be further loaned to PMAG and KTM AG for creditor payments and restarting operations.
  
  

These funds were raised through bank loans in the Netherlands and internal investments by Bajaj Auto.

Bajaj has also taken over an EUR 80 million loan agreement (inclusive of interest and costs) that had previously been pledged by a Pierer group company. This step was taken to avoid foreclosure and support the overall restructuring strategy. Regulatory approvals are being sought under Austrian laws, including from the Takeover Commission and other authorities.

Forward plan

Pending regulatory clearance, Bajaj plans to implement several changes, including the reconstitution of KTM’s governance structure and Board of Directors. 

The company also intends to initiate operational turnaround measures aimed at restoring business momentum and financial sustainability. 

Additionally, there will be a focus on expanding the existing joint development model and identifying synergies across product development and distribution. Bajaj will also evaluate potential partnerships to strengthen KTM’s long-term competitiveness.

Production of motorcycles and related components is expected to resume following the formal conclusion of restructuring proceedings and regulatory clearance.