The Three Names that Could Come to KTM’s Rescue
As KTM attempts to navigate troubled financial waters, the three investors that could help to save it have become known
KTM’s current financial position could, should things head south, have far-reaching effects on the EU motorcycle industry. With that in mind, keeping the Austria brand afloat is the best outcome for everyone.
We already know that Lewis Hamilton is in talks with KTM to invest in its MotoGP team, but that is just a tiny proportion of KTM AG’s business portfolio, and a financial drop in the ocean compared to its motorcycle production and R&D business.
To put things into perspective, the Pierer Mobility Group (PMG) is looking to get three of its core business units back on an even keel. They are KTM AG (the motorcycle maker), KTM Forschungs & Entwicklungs GmbH (the R&D arm), and KTM Components GmbH which fairly obviously is a component maker.
Between them, it is thought that around €2.9 billion is owed to around 2,500 creditors, with KTM AG owning the largest slice of that debt (€2.7 billion) with the R&D department owing €105 million, and KTM Components adding a further €80 million to the pot. The plan for that debt, which is being calculated and managed by the insolvency firm AKV, is to pay creditors 30 per cent of the outstanding debt within two years of the creditor accepting the restructuring plan.
So that’s one side of KTM’s life raft inflated; pay the creditors their portion of the debt in a reasonable time scale. But the other side of that financial life raft is still to be inflated, and that includes refloating KTM so it’s able to stand on its own two wheels, and allow it to make enough profit to fully repay those owed. That’s where Citibank comes in, the global investment and banking firm that is helping to find parties with deep enough pockets to step in.
One of those brands is already very closely tied to KTM, with the Indian motorcycle manufacturer Bajaj being the first hat in the ring, with a reported €300 million in hand ready to invest. Bajaj has long been a partner of KTMs, handling the production of certain models on behalf of the Austrian brand since 2007. Bajaj is an automotive behemoth, employing more than 60,000 globally, and helping to make the Bajaj family one of the richest on the planet with an estimated net worth of over $20 billion. Given the size of the Bajaj portfolio, its financial and manufacturing power, and its already close ties to KTM, it seems like a very sensible move for it to line itself up as one of the key players ready to help save the historic Austrian brand.
The second name in the ring is another Asian manufacturer, and yet another that has close ties to KTM. It is, you guessed it, CFMoto. Like Bajaj, CFMoto assisted KTM with the manufacturing of bikes, and the two shared engine platforms, allowing CFMoto to run KTM-designed powerplants in a number of its own models. CFMoto is thought to be ready to pour 350 and 700 million Euros into Pierer Mobility, which PMG can then divest into KTM.
The third name in the ring is a little more leftfield, and not one that we’ve heard of before. FountainVest is an investment firm which has been operating since 2007. It’s worked with several sports brands in the US and Asia, investing more than $11 billion according to its website.
So that’s the plan as it stands, and while that sounds like there are viable options when it comes to helping to finance KTM AG, some staff at KTM are still without wages and unlikely to see any until mid-January. KTM’s financial salvation won’t just be beneficial for the European motorcycle industry, there are thousands of families that depend on it, who have all probably had a very tough festive period.
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Simon (AKA Toad) has been working within the motorcycle industry for more than twelve years, and a member of the motorcyclist family since birth. Growing up around British-built single and twins, it was inevitable that a life on two wheels was on the cards, from a very early age!
