Bajaj Auto likely to invest Rs 1,360 crore into KTM

Bajaj Auto may pump in additional funds of nearly Rs 1,360 crore into KTM, the financially struggling European motorcycle brand. Bajaj Auto, through its subsidiary Bajaj Auto International Holdings BV (BAIHBV) based in the Netherlands, reportedly holds a 49.9% stake in Pierer Bajaj AG (PBAG) in Austria, which controls nearly 75 percent of Pierer Mobility AG -- the owner of KTM motorcycles.

KTM had, in November, said it would need emergency funds to keep itself afloat and was in talks with its owners as well as lenders. While the Indian company has not publicly commented on whether it will invest more money into KTM, the company today made an announcement that its board has approved the investment of 150 million euros (around Rs 1,350 crore) into Bajaj Auto International Holdings BV, Netherlands, making it highly likely that the funds will be used to shore up KTM's finances in Europe.

It is not clear whether this would make Bajaj Auto the biggest shareholder of KTM, or whether Bajaj Auto's partner promoter, Austrian businessman Stefan Pierer, will also chip in an equivalent amount -- keeping their respective stakes in equilibrium.

History of Bajaj Auto and KTM's partnership

Bajaj Auto has a manufacturing and marketing agreement with KTM, and the latter's financial health is helpful for the continued operation of the KTM brand in India. Pierer acquired KTM in 1992 when it was facing bankruptcy and turned it into Europe's largest motorcycle manufacturer in the 2010s.

Pierer brought in Bajaj Auto as an investor and strategic partner in 2007, selling an initial stake of 14.5 percent. Subsequently, Bajaj Auto increased its exposure to KTM to a higher level and entered into licensing and manufacturing agreements. However, due to a continuing slowdown in Europe's premium motorcycle market and company-specific problems, KTM today needs urgent cash infusions to continue its operations. The company recently acknowledged that its European operations are not sustainable in their current form, and need to be truncated further so that it can be put on a 'stable operational and financial basis'.

History of KTM

KTM, known for its off-road motorcycles and successful street bikes, has been a significant player in the European motorcycle market. It was founded by Hans Trunkenpolz as Kronreif, Trunkenpolz, Mattighofen in 1934 as a metalworking shop in Mattighofen, Austria. Initially a car repair shop, it started producing motorcycles in 1954 with the R100, its first motorcycle.

Through the 1950s and 60s, KTM established itself in motorcycle racing, particularly off-road competitions. The company grew steadily, producing motorcycles and bicycles. KTM focused on off-road motorcycles, gaining recognition for its rugged design and performance in motocross and enduro events. By the 1970s, it had become known for its off-road motorcycles, winning numerous racing championships. The company expanded its portfolio to include street bikes and mopeds. However, KTM faced severe financial difficulties in the early 1990s and declared bankruptcy in 1991.

KTM's acquisition by Pierer Mobility

In 1992, Stefan Pierer acquired the company through his Cross Holding company (now Pierer Mobility AG). Under Pierer's leadership, KTM focused on off-road motorcycles and began its transformation into a premium motorcycle brand. In 2007,KTM formed a strategic partnershipwith India's Bajaj Auto. This allowed KTM to develop and manufacture smaller-displacement motorcycles cost-effectively in India, leading to successful models like the Duke series.

KTM, under PIERER Mobility AG, acquired the Swedish motorcycle brand Husqvarna Motorcycles from BMW Motorrad 2013. KTM revitalized the brand, positioning it alongside KTM as a premium off-road and street motorcycle maker. It also acquired a majority stake in GasGas, a Spanish manufacturer specializing in trials and enduro motorcycles, expanding its presence in niche off-road segments like trials riding.

The company successfully entered the street bike market with models like the Adventure series and the Super Duke, becoming Europe's largest motorcycle manufacturer. Today, KTM is known for both its off-road and street motorcycles, with a strong presence in motorsport, including MotoGP.