Singapore-based Olam Group Ltd. is grappling with a tumultuous year as it confronts fraud allegations in Nigeria, leading to a significant decline in its shares, the company’s largest weekly loss in over a decade.
This setback adds to the company’s challenges, including a substantial profit decline and a postponed initial public offering (IPO).
Throughout the week, Olam Group’s shares saw a dramatic decline of approximately 16%, the most significant drop since May 2012.
The company’s stock also hit a nearly 15-year low, inching dangerously close to the S$1 mark.
Olam Group firmly refutes the allegations of fraud, which were initially reported by local Nigerian media. The company’s board has responded by initiating a comprehensive review of the matter. Olam Group’s presence in Nigeria encompasses a diverse range of businesses, from animal protein to rice farming and grains, contributing over $3 billion to its annual revenue.
This year has proven to be challenging for Olam Group on multiple fronts. The company witnessed a staggering 90% drop in first-half profits, primarily attributed to reduced crop yields from its almond orchards.
Also, the planned IPO of its Olam Agri unit in Saudi Arabia has been postponed until 2024, after initially being slated for the first half of the year.
Ten years ago, the company faced scrutiny over its business model when short-seller Muddy Waters LLC raised concerns. This scrutiny eventually led to a takeover by Singapore’s Temasek Holdings Pte., a state-owned investment fund that currently holds approximately 51% of Olam Group.
Olam Group brought the allegations in Nigeria to light on Monday, and on Wednesday, it announced that its Nigerian unit had posted a bond for director Prakash Kanth to ensure his cooperation with any legitimate requests from Nigerian authorities for information or assistance.
Despite the challenges and uncertainty, Olam Group remains committed to addressing the allegations while continuing its operations and striving to regain stability in its share prices.
