Rajiv Bajaj-led Bajaj Auto took out an unsecured loan of Rs 5,431.08 crore ($632 million) from JP Morgan Chase Bank, DBS Bank Ltd, Citigroup Global Markets Asia Ltd last week, the company announced in an exchange filing on Friday.
The one-year loan was taken by the European unit of the two-wheeler giant and reports say it would be used to fund an insolvency plan for Austrian motorcycle maker KTM AG. Bajaj Auto is the co-owner of the parent company of KTM, Pierer Mobility, along with Austrian entrepreneur Stefan Pierer. Citi Group was the advisor of the company in securing the loan.
In the exchange filing, Bajaj said that the funds will be used for investments and it did not name KTM.
How Bajaj Auto Owns KTM
Bajaj Auto in 2007 acquired a 14.5% stake in the Austrian motorcycle manufacturer through its Dutch subsidiary, Bajaj Auto International Holdings BV (BAIHBV). This strategic investment was aimed to leverage KTM's expertise in performance motorcycles and expand Bajaj's presence in global markets. Over the years, Bajaj increased its stake in KTM, reaching about 48% by 2013, as per the report.
In 2021, Bajaj restructured its holdings by swapping a 46.5% stake in KTM AG for a 49.9% stake in PTW Holding AG, the parent company of KTM Group. PTW Holding AG is a private Austrian holding company that owns and operates brands like KTM, Husqvarna, and GasGas. It serves as the majority shareholder of Pierer Mobility AG, the Switzerland-listed parent company overseeing these brands.
Bajaj Auto International Holdings B.V. (BAIHBV) restructuring its investment in KTM AG made it an indirect stakeholder not only in KTM but also in other brands under Pierer Mobility AG.
According to a report by Italian news portal GPone, as of now, 74.9% of Pierer Mobility AG is owned by Pierer Bajaj AG, while Pierer Konzerngesellschaft mbH holds an additional 0.1%. The remaining 25% of shares are publicly traded. Bajaj Auto International Holdings BV also owns 48% of KTM AG. The majority shareholder in KTM AG is KTM Industries, with a 51.7% stake. Pierer Industrie AG—controlled by Stefan Pierer—owns about 62% of KTM Industries.
Since last autumn, KTM AG has operated as the sole active company, while PIERER Mobility AG has shifted into the role of a financial holding entity, the portal said.
In 2023, the partnership reached a major milestone when the one-millionth KTM motorcycle was assembled at Bajaj's manufacturing facility in Pune, India.
What Went Wrong With KTM
According to Bloomberg, KTM AG filed for insolvency last year after struggling to navigate the volatile demand for its motorbikes during the Covid-19 pandemic, which led to excessive inventories. The company has an excess inventory of around 265,000 units, many of which are not Euro5+ compliant, as per local reports. These bikes must be either pre-registered before January 1 or sold through special exemptions to remain eligible for the European market.
In November 2024, KTM initiated self-administration restructuring proceedings. Around 1,200 creditors filed claims totalling approximately €2.2 billion. A restructuring plan — offering a 30% cash settlement — was accepted in February by a majority of creditors at the Ried im Innkreis Regional Court. Under this plan, KTM was to transfer €600 million to restructuring administrator Peter Vogl by May 23.
The February court ruling requires KTM to pay €600 million to creditors by the May deadline. This covers 30% of outstanding debt. An additional €150 million is required to maintain operations, bringing the total capital need to €750 million.
Bajaj Auto had already emerged as a key potential investor during the initial crisis phase and transferred €200 million by April 1, 2025 to help resume production after a three-month halt starting 17 March. This initiative aimed to reduce a backlog of 130,000 unsold motorcycles.
Despite efforts to restart operations, production was halted again at the end of April due to a shortage of parts and is not expected to resume until July 27.
Bajaj is now anticipated to contribute the full €600 million necessary to execute the restructuring plan. This move would likely make the Indian manufacturer KTM AG’s new majority shareholder, as per the reports.
"And for us, as Bajaj, it's (KTM) a very large part of our business in revenue terms, it's very profitable for us. So this is not something we would like to let go of easily. But from the current position, which is extremely difficult, we need to find a very sustainable solution for the future. It's not just a question of cut paste in the short term," said Rajiv Bajaj in an interview With MoneyControl.
"But you know, in these things, there's so many slips between the cup and the lip. So it will be only closer to May 23, that hopefully everything will be resolved," he added.
To secure the remaining capital needed for operations and restructuring, Pierer Mobility has engaged Citigroup Global Markets Europe AG to attract up to €800 million in investment. While specific investors remain unnamed, Pierer Mobility confirmed in January that several offers had been received. Speculation continues to point toward BMW as a potential partner.
