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Bajaj Auto eyes access to EV tech through KTM share swap

Bajaj Auto owns 48% stake in KTM AG through its wholly owned subsidiary Bajaj Auto International Holdings BV. (Abhijit Bhatlekar/Mint)Premium
Bajaj Auto owns 48% stake in KTM AG through its wholly owned subsidiary Bajaj Auto International Holdings BV. (Abhijit Bhatlekar/Mint)

  • Bajaj Auto owns 48% stake in KTM AG through its wholly owned subsidiary Bajaj Auto International Holdings BV
  • Post this transaction, PMAG would acquire Bajaj Auto’s 48% stake, increasing its own stake from 51.7% in KTM AG to 99.7%, the company said

MUMBAI : The maker of two- and three-wheelers, Bajaj Auto Ltd is eyeing access to electric vehicle (EV) technologies through the proposed restructuring of its joint venture with the Austrian bikemaker KTM AG, a senior company executive confirmed to Mint.

The Pune-based company on Tuesday said that it has restarted the discussions with Pierer Industrie AG to swap Bajaj Auto’s stake in KTM AG to its parent company Pierer Mobility AG (PMAG).

Owned by industrialist Stefan Pierer, Pierer Industrie holds more than 63% in Pierer Mobility AG (PMAG), which owns a controlling stake of 51.7% in KTM AG, the maker of motorcycles under KTM, Husqvarna, GasGas brands.

Bajaj Auto owns 48% stake in KTM AG through its wholly owned subsidiary Bajaj Auto International Holdings BV.

“The proposed restructuring will simplify Bajaj Auto’s shareholding structure in the KTM Group. You see besides KTM AG, the parent company Pierer Mobility has several other subsidiaries including Pexco, which makes electric bikes," a senior executive at Bajaj Auto said, suggesting the company’s plans to get access to EV technologies. He requested not to be named in the story.

“Pierer Mobility AG (PMAG) was informed by Pierer Industrie AG and Bajaj that they have restarted discussions on assessing the possibility of transferring Bajaj's 48% stake in the operating KTM AG to PMAG, with the Pierer-Group continuing to retain the controlling majority over PMAG," the company said in a regulatory filing.

In March last year, the two companies were in discussions over the possible stake swap from KTM AG to its parent company. However, the talks were later put on hold temporarily as PMAG continued to consolidate its structure comprising several subsidiaries.

As part of that, in December 2019, PMAG inducted electric bike maker Pexco GmbH as a wholly owned subsidiary. The acquisition represented early steps by PMAG aiming for two-wheeler electrification globally as the company drew plans for Pexco to achieve a turnover of 100 million euro in 2020.

“Bajaj Auto’s intent behind swapping its stake from KTM to its parent company is to get a better access to the EV technologies as Pierer Mobility also has a subsidiary named Pexco, which produces and sells electric bikes," said Aditya Jhawar, auto analyst, Investec Capital Services India Pvt Ltd.

Jhawar said that coming from KTM, the EV technologies would be more sophisticated and could be used in electric bikes as well.

“Bajaj Auto and KTM Group are very closely connected companies. There are many electric scooter manufacturers but very few companies that make electric bikes globally," Jhawar said.

According to the two companies, as the first step Pierer Industrie would contribute its 60% stake in PMAG to "PTW Holding AG", a new JV with Bajaj Auto, thereby becoming a direct 60% shareholder of PMAG.

“If a decision is taken to execute the transaction, PMAG will consider the legal and economic requirements and conditions of a capital increase by contribution in kind from the existing authorized capital of the company. The authorized capital enables a capital increase of up to 50% of the existing share capital," it said in the filing to the exchange.

Post this transaction, PMAG would acquire Bajaj Auto’s 48% stake, increasing its own stake from 51.7% in KTM AG to 99.7%, the company said.

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