Bajaj Will Ride KTM

Pierer Mobility AG is the holding company for KTM AG, the motorcycle manufacturer. Pierer Mobility has other business areas as well like financing and components manufacturing, but KTM AG is by far the biggest business area for the group. For this analysis, I would frequently interchange KTM and Pierer throughout to keep the flow. For most practical purposes, they are the same.

First, the News from KTM

Last week, KTM announced that it had secured funding from long-time partner and very significant minority shareholder, Bajaj Auto. The funding of EUR 800m means that PIERER Mobility AG and KTM AG would be able to serve the quotas in the KTM restructuring proceedings and the restructuring plan quotas of KTM AG, KTM Components GmbH and KTM Forschungs & Entwicklungs GmbH will be fulfilled in time.

India-based Bajaj Auto provided the funds to KTM / Pierer through its international arm, Bajaj Auto International Holdings B.V. The funds are part of the quota payment to the creditors in furtherance of KTM’s debt restructuring. Bajaj (using its USD 1.9bn cash reserve strong balance sheet) helped secure a loan in the amount of EUR 450 million to KTM AG and an additional amount of EUR 150 million to PIERER Mobility AG which passes on the required balance to meet the quota payments to the KTM companies.

Bajaj, through its exchange filings in India has informed that it has raised EUR 666 million in debt for Bajaj International BV from Standard Chartered, JP Morgan Chase, DBS Bank, and Citigroup Global Markets.

Stefan Pierer is Gone

Pierer Mobility also announced that Stefan Pierer will step down from the Executive Board of PIERER Mobility AG in June 2025 after the conclusion of the restructuring proceedings. The Board is appointing Verena Schneglberger-Grossmann, who has been with the group since November 2015, as new member of the Executive Board (Chief Legal Officer) of PIERER Mobility AG supporting the CEO Gottfried Neumeister.

Bajaj Auto is in Control

In a separate release, Pierer Mobility informed that Pierer Industrie AG, which holds a 50.1% stake in Pierer Bajaj AG, which in turn holds a 74.9% stake in Pierer Mobility (I know, its confusing and we have a flow diagram for you) has concluded a call option agreement with Bajaj BV which enables Bajaj BV to acquire the shares of Pierer Industrie AG in Pierer Bajaj AG and thus indirect control over PIERER Mobility AG until the end of May 2026.

In short, Bajaj is taking over KTM.

Bajaj's First Save was in 2007

Bajaj first saved KTM in 2007. At that time, Bajaj was a cash-rich (always has been since the ICE age) Indian company with a small, yet growing, identity outside India. KTM was a quintessential European motorcycle brand - loads of passion, an immaculate history, and no financial capabilities to build on it.

Bajaj put in money and took a 14.5% stake. Over the years, the Indian kept on investing and increasing its stake, which had reached nearly 49% by 2020. Bajaj's stakeholding was never direct. In the corporate structure, KTM is owned by Pierer Mobility AG, an entity listed on the Wiener Börse (Vienna Stock Exchange). Pierer Mobility AG is controlled (74.9% ownership) by Pierer Bajaj AG, in which Bajaj has a 49.9% stake through its Netherlands-based arm, Bajaj Auto International Holdings BV. Pierer Industrie AG has a 50.1% stake in the entity.

The complex holding structure meant that Bajaj was a very strong minority shareholder, just a whisker away from a controlling stake. However, the Indian company stayed out of active management of KTM. Bajaj Auto had two members on the board of Pierer Mobility, including Rajiv Bajaj, who served as the Deputy Chairman of the Supervisory Board.

A Relationship Beyond Equity

Apart from investment and equity, the relationship went deep into the more practical business areas - Bajaj and KTM co-developed single-cylinder motorcycles for emerging markets and the beginner's license segment in developed markets. This resulted in a wide range of products, ranging from 125cc to 400cc, that would be sold under the KTM and Husqvarna brands.

In the KTM annals, the impact of the Bajaj-KTM products is often underestimated. Before the smaller Dukes came around, KTM’s entry-level street bike was the Duke 690, hardly an entry-level motorcycle. With the newly developed Duke family (125, 200, 250, and 390 models), KTM could target the beginner license segment and also enter high-volume markets like India, ASEAN, and Latin America.

For Bajaj, this was a multi-pronged relationship. The Indian company invested in KTM, co-developed motorcycles, and also produced all non-Chinese-market KTM single-cylinder street bikes. The Indian manufacturer became the global export hub for the Austrian brand. Bajaj would also re-tune the engines and use them in its own street bikes.

There were other mutually beneficial bits as well - Bajaj was the KTM retailer in India and Indonesia, two of the biggest two-wheeler markets in the world. KTM also owned 49% of the famed design studio KISKA, and Bajaj has used its services for some of their models and communication.