Bajaj Auto to gain post simplified equity structure in Pierer Mobility

Bajaj Auto’s clout in the global motorcycle market, both in the conventional IC engine space as well as the electric two wheeler space, will increase considerably once the proposed simplified equity structure in the Pierer Mobility company comes into effect.

Rajiv Bajaj, Managing Director of India’s leading two-wheeler company Bajaj Auto and Stefan Pierer, Chairman of the Executive Board, Pierer Mobility AG have come together to simplify their respective shareholdings in Pierer Mobility AG, Europe's leading manufacturer of powered two-wheeler vehicles.

Currently, Bajaj Auto International Holdings BV (BAIHBV), a 100 per cent subsidiary of Bajaj Auto based in Netherlands and Pierer Mobility AG (PMAG) have an equity stake in Austria based motorcycle maker KTM AG. As of now, Pierer (PMAG) and Bajaj (BAIHBV) approximately hold 51. 7% and 48% in KTM AG respectively,

Now all this will change with Bajaj Auto getting a bigger role in the overall Pierer Mobility Group, post the proposed equity change.  To understand the new proposed equity structure change, one has to go back to the overall interests of the Pierer Mobility AG businesses. In KTM AG the Pierer and Bajaj companies have a substantial shareholding as mentioned above. In turn, KTM AG owns 100 per cent in brands like KTM, Husqvarna, GasGas and WP Suspension.

But Pierer Mobility AG also has a 100 per cent equity stake in Pierer E-Bikes GmbH which in turn has a 100 per cent control over electric bike brands like Husqvarna e-bicycles, R Raymon (German Performance bikes), GasGas, Pexco and bike&wheels. That is not all. Pierer Mobility AG also has business interests in companies relating to Design, Concept Development & Digitalisation. Here it has a 50pc equity stake in kiska., 74pc stake in KTM ETechnologies, 100pc stake in KTM Innovation,100pc stake in Avocodo and 45 per cent equity stake in DC.Digital.  

The new proposed equity structure

Pierer Mobility AG is listed on the Zurich and Frankfurt stock exchanges. In this company, PTW Holding AG (PTW Holding), which in turn is a 100% subsidiary of Pierer lndustrie (a Pierer Company) holds 60% equity stake. In the 2020 financial year, the Pierer Group, Austria held a stake amounting to around 65.5 per cent of the company's share capital. The free float was around 33.6 per cent while the proportion of the treasury shares was around 0.9 per cent. Thus apart from the 60pc equity held by PTW Holding in PMAG, around 5.29 % in PMAG is held through other group entities of the Pierer Group.

Now, coming to the proposal at hand, it envisages two steps: One, the Bajaj Auto Netherlands subsidiary  BAIHBV will swap 46.5% (out of its 48%) stake in KTMAG, for a stake in PTW Holding, thus becoming an equity holder along with Pierer lndustrie in PTW Holding. Two, PTW Holding will contribute its 46.5% stake in KTM AG to PMAG, for fresh shares to be issued by PMAG in lieu.

 After completion of both steps, Pierer lndustrie and BAIHBV will be stake holders in PTW Holding, with PMAG as its listed subsidiary. PMAG's stake in KTMAG would stand increased to 98.2% and it would continue to hold the other entities mentioned above. In short, Bajaj Auto will now be part of the bigger business of the Pierer Group which would include electric two wheelers too.

Bajaj Auto's Board of Directors accorded its in-principle approval to this proposal and directed that this approval (as approval of BAIHBV shareholders), be conveyed to its wholly owned subsidiary, BAIHBV.

BAIHBV's Board at its meeting on 26th July, 2021 considered the proposals and also noted its shareholders' in-principle approval. After due deliberations, BAIHBV's Board also accorded its in-principle approval for the proposals.

Electric two wheelers is the future

Earlier this year, both Pierer Mobility and Bajaj had announced that they are strengthening their strategic cooperation in the development of electric products in the two-wheeler sector to meet the growing demand for innovative e-mobility concepts.

The two companies decided to jointly explore the zero tailpipe emissions, low maintenance, and long-lasting benefits of light electric vehicles in urban settings and dense metropolitan areas. This renewed strategy will centre on the development of common electric platforms to deliver the advantage of scale, regarding all critical components, allowing both companies to quickly and effectively adapt to evolving customer needs globally. Part of this remit involves an open approach to all battery opportunities, aiding the parallel advantage of both fixed and swappable solutions. Moving at pace, the initial output from this manufacturing impetus will see the first of these shared platform vehicles beginning of 2022.

Record year for Pierer Mobility AG in 2020 & 2021

In January 2021, Pierer Mobility AG had announced that it sold 326,471 motorcycles & e-bicycles in 2020 and earned revenues of EUR 1,530 million (Rs 13,391.30 crore approx).

In Europe, sales to dealers were around 100,000 motorcycles and 56,064 e-bicycles. Around two-thirds of the motorcycles were sold to the dealer network in markets outside Europe, especially in North America, India and Australia.

The sales increase has continued into 2021 for the company. In the first half of the 2021, Pierer Mobility AG sold worldwide a total of 176,045 motorcycles of the KTM, Husqvarna and GASGAS brands (previous year: 90,331), almost doubling sales compared to the first half of 2020 (+95%).

Furthermore, a total of 53,378 units were sold through the very successfully established non-e-bike and e-bike division (+25%). 39,603 of these are e-bikes and 13,775 are non-e-bikes of the R Raymon, Husqvarna and GasGas brands.

In Europe, in this period of time, 73,224 motorcycles were sold (+76% over the same period of the previous year). Growth was particularly strong in North America, where 30,419 motorcycles sold, this corresponds to an increase of 160% compared to the first half of 2020. A similar trend was seen in Australia/New Zealand, with a 25% increase and a total of 7,842 units sold.

In India, despite the ongoing difficult conditions related to the COVID-19 pandemic, sales increased by 52% to 30,561 motorcycles (previous year: 20,160).