Bajaj Auto Likely To Invest €125 Million More In KTM As Restructuring Deadline Nears
It's still unclear whether Bajaj Auto will pick up a majority stake in KTM AG in lieu of the fund infusions.
Bajaj Auto Ltd. is set to infuse more funds into Bajaj Auto International Holdings BV for "investment opportunities", even as the restructuring deadline for KTM AG nears.
The board of directors of the Pune-based automaker has approved an additional equity investment of €125 million (Rs 1,200 crore) into its Netherlands-based unit, according to an exchange filing on Thursday.
The all-cash infusion is a related-party transaction done on an arm's length basis. "The additional capital infusion will be made depending on the fund requirements on or before 20 May 2025," the filing stated.
Bajaj Auto International Holdings, an investment vehicle of Bajaj Auto, holds a 49.9% stake in Austrian bikemaker KTM AG, which is undergoing bankruptcy proceedings.
The approval for the fresh fund infusion follows the €150 million that Bajaj Auto invested in its overseas unit on Feb. 21. Of this, €50 million was extended as a loan to KTM AG to restart operations. On Feb. 25, KTM's creditors approved a restructuring plan under which €548 million had to be submitted by 23 May.
On March 17, KTM restarted production at its Mattighofen, Austria-based plant. On April 3, KTM received €50 million more from Bajaj Auto International Holdings. In all, KTM needs €800 million to finance the cash quota and further production.
Queries emailed to Bajaj Auto remained unanswered.
Complex Holding Structure
What complicates this deal, as well as restructuring, is a complex holding structure for one company.
Bajaj Auto International Holdings, which is a wholly owned subsidiary of Bajaj Auto, and Stefan Pierer's Pierer Industrie AG hold 49.9% and 50.1% stakes in Pierer Bajaj AG.
Pierer Bajaj AG is the holding company of Pierer Mobility AG, a listed company that controls KTM AG. KTM AG, in turn, owns the KTM brand of motorcycles, Husqvarna, GasGas and the eponymous MotoGP team. It's KTM AG that filed for bankruptcy in Vienna.
It's still unclear whether Bajaj Auto will pick up a majority stake in KTM AG in lieu of the fund infusions. Things may become clearer when Bajaj Auto declares its fourth-quarter results on May 29.
Shares of Bajaj Auto closed 2.79% higher at Rs 8,328.30 apiece on the BSE on Thursday, compared to a 1.48% advance in the benchmark Sensex.
