Bajaj Auto Infuses ₹5,820 Crore into KTM AG to Prevent Insolvency, Aims for Majority Control

Mumbai, May 23, 2025 – Bajaj Auto Ltd (BSE: 532977, NSE: BAJAJ-AUTO), through its wholly owned Netherlands-based subsidiary, Bajaj Auto International Holdings BV (BAIHBV), has initiated a strategic financial and ownership restructuring of Austria’s KTM AG. The move involves a substantial capital infusion of €600 million (approximately ₹5,820 crore) to avert potential insolvency and position Bajaj Auto to acquire a controlling interest in its longstanding partner.

₹5,820 Crore Financial Lifeline to KTM AG

In a dual-structured transaction approved by Bajaj Auto’s Board on May 21, BAIHBV has committed the following:

The €450 million secured loan will be transferred into an escrow account overseen by a court-appointed administrator in Austria. These funds will be allocated towards creditor payouts in line with a court-sanctioned restructuring plan. Meanwhile, the €150 million subscribed in convertible bonds of Pierer Bajaj AG (PBAG) will be channelled further within the group to address KTM’s immediate working capital needs and operational restart.

Transition from Strategic Investor to Controlling Shareholder

This transaction marks a significant shift in Bajaj Auto’s role—from a strategic investor to an active owner. Currently, Bajaj Auto holds an indirect stake of approximately 37.5% in KTM AG through its 49.9% ownership in PBAG. Upon regulatory clearance from Austrian authorities, Bajaj is expected to assume majority control of PBAG, thus securing a controlling interest in KTM AG. This represents a transition from a passive shareholding to active operational leadership.

KTM’s Financial Distress and Judicial Restructuring

KTM AG and its subsidiaries entered into court-supervised self-administration in Austria in November 2024, owing to severe liquidity constraints. On February 25, 2025, creditors approved a restructuring plan mandating a 30% settlement of outstanding claims. The approved plan includes a strict deadline of May 23, 2025, to arrange the required cash infusion—failing which KTM would automatically enter formal insolvency proceedings. Bajaj Auto’s intervention is therefore pivotal in ensuring KTM’s financial stability.

Governance Reforms and Strategic Roadmap

Following the requisite regulatory approvals, Bajaj Auto intends to:

• Reconstitute KTM AG’s board and implement governance reforms
• Roll out a comprehensive operational turnaround strategy
• Expand India-based joint product development to support KTM’s export initiatives
• Pursue global alliances to drive sustainable growth and innovation

This long-term vision seeks to leverage synergies across product development, global distribution, and brand equity for KTM, Husqvarna, and GASGAS motorcycles.

Management Perspective

In an official statement, Bajaj Auto remarked:

“This dual strategy of capital infusion and ownership transition, undertaken at a crucial juncture, positions Bajaj Auto as a decisive force in shaping the future of one of the world’s most respected high-performance motorcycle brands.”

Regulatory and Shareholder Processes

Given the nature of the transaction, which qualifies as a material related party transaction under SEBI guidelines, Bajaj Auto will seek post-facto shareholder approval via a postal ballot. The deal is supported by robust security measures including pledged shares of KTM AG, parental guarantees, and asset-backed charges to secure the loan.

Forward Outlook

This strategic initiative underscores Bajaj Auto’s ambition to become a global leader in the premium motorcycle segment. The capital infusion not only secures KTM AG’s operational continuity but also empowers Bajaj Auto to pursue its global growth agenda with renewed momentum and control.

Disclaimer: This content is only for informational purpose. It does not make any recommendation to act or invest. Please read the offer documents carefully before investing. Investments are subject to market risks and other risks. There is no guarantee of the actual returns that will be given.

REF: https://nsearchives.nseindia.com/corporate/lkwalimbe_bajajauto_co_in_22052025100751_SE_Intimation_-_22_May_2025.pdf