Bajaj Infuses Fresh Funds Into KTM

A recent regulatory filing by Bajaj Auto reveals that it has approved the investment of funds up to 150 Million Euros (around Rs 1,364 Crore) in Bajaj Auto International Holdings BV, Netherlands. The latter is a wholly owned subsidiary of Bajaj Auto, and this investment is to help KTM mitigate its situation of ailing finances. 

According to the filing, the funds will either be in the form of equity capital (money raised by selling shares to its investors) or preference capital (money raised by issuing preferred stocks, which is a form of stock that has a higher claim to dividends when compared to common stockholders), or loan. The funds will be issued in one or more phases, which will be determined in due course of time, depending on the fund requirements up to 31 March 2026. This means the funds are not disbursed at one go, at least not as of now. While this is just a fraction of the 2.9-odd billion Euro-debt that KTM is knee-deep in, we believe it will be primarily used to just keep the brand afloat.

KTM will have to repay a minimum of 30% to its creditors if it were to stay alive and kicking. Thankfully Pierer Mobility AG has received several offers from multiple investors and has revealed that it will be able to repay at least to the statutory extent of 30%. The final creditors’ vote will take place on February 25, 2025, which will give the verdict about the Austrian bikemaker’s future.

Also, on February 20, KTM’s parent conglomerate Pierer Industrie AG concluded its restructuring proceedings and is set to repay select creditors’ loans of around 247.5 million Euros. While the creditors have accepted the repayment proposal, the brand will have to settle 69% of the amount by December 31, 2026, and the remaining 31% by December 31, 2027. It’s also reported that KTM is working on securing enough funding to resume its production in Austria by March 17, 2025.

KTM already has a thriving 390 platform with several newly-introduced products, together catering to the streetfighter, ADV, supersport, dual-sport and even supermoto segments. However, amidst the cash problems, it seems only the KTM 250 range is carrying forward the sales momentum at the moment. 

That said, the infusion of funds from Bajaj can also be construed as a gesture of goodwill that the brand has on KTM’s future. The global two-wheeler segment is slowly moving more towards the mid-capacity (500cc and below) segment, which is exactly where Bajaj’s manufacturing prowess lies. Once the brand stabilises its finances, it should be able to resume full-fledged exports.