The majority of Adani Group shares plunged on Monday as the Indian conglomerate’s response to criticism from a U.S. short-seller fell flat with investors, escalating a market meltdown that has already cost the company’s stock $65 billion in losses.

The Indian business, led by Asia’s richest man Gautam Adani, has been at odds with Hindenburg Research and responded on Sunday to the short-report seller’s from last week that raised issues with its debt levels and usage of tax havens.

Adani claimed to have followed all local regulations and to have provided the required regulatory disclosures.

On Monday, the stock prices of Adani Transmission, Adani Total Gas, Adani Green Energy, Adani Power, and Adani Wilmar plummeted by 5% to 20%.

Flagship Adani Enterprises fluctuated between gains and losses before closing 4.8% higher. This week’s follow-on share sale will be a significant test for the company. It remained well below the issue’s offer price, which if it is successful will be the largest share offering of its kind in Indian history.

The second day of the $2.5 billion secondary share offering by Adani Enterprises came to an end amid gloomy market sentiment. The stock’s closing price of 2,892.85 rupees was 7% less than the lower limit of the offer price band of 3,112 rupees. 3,276 rupees is the upper band.

Adani has now received offers for 1.4 million shares, or just more than 3%, of the 45.5 million shares up for sale, according to data from stock exchanges on Monday. On Tuesday, the agreement is finalised.

According to the data, neither domestic nor international institutional investors, nor mutual funds, have placed any offers thus far.

“Retail participation is likely to have a shortfall with current market prices still trailing the offer price and sentiment taking a hit due to the Hindenburg controversy,” said Hemang Jani, equity strategist at Motilal Oswal Financial Services.

“While there is a risk that the share sale does not go through, it will be crucial today to wait and see how institutional investors participate.”

International Holding Company, an Abu Dhabi corporation, announced on Monday that it will contribute 1.4 billion dirhams ($381.17 million) to the sale.

Even though sources claimed bankers of the nation’s largest secondary share sale were considering extending the timeline beyond January 31 or adjusting the price due to the decline in its share price, Adani Group told Reuters in a statement on Saturday that the sale remained on schedule at the planned issue price.

Gautam Adani, an Indian business magnate, addresses attendees at the Bengal Global Business Summit in Kolkata.

According to Indian legislation, the share offering must receive a minimum of 90% subscription; otherwise, the issuer is required to repay the full cost. Among the investors who submitted bids for the anchor portion of the offering were Maybank Securities and the Abu Dhabi Investment Authority.

In a statement, Maybank said that because the subscription to Adani’s offer was entirely covered by client funds, “there is no financial impact” on it.

The Adani Group’s response to Hindenburg’s report is currently being reviewed, according to state-run insurance goliath Life Insurance Corporation (LIC), which said it would conduct talks with the management in the coming days.

5% of the $734 million anchor component went to LIC. It already owns 4.23% of the main Adani company, while its other exposures include 5.96% of Adani Total Gas and a 9.14% investment in Adani Ports.

“Since we are a large investor we have the right to ask relevant questions,” LIC Managing Director Raj Kumar said.

Bonds issued by Adani Ports and Special Economic Zone denominated in US dollars kept falling into the second week, with the August 2027 bond maturing down 5 cents to 73.03 cents, the lowest since June 2020. The price of the group’s other dollar-denominated bonds was also falling.

According to MSCI, the company that creates indexes, it was monitoring the variables that “may effect the eligibility of the relevant assets” in MSCI indexes and was looking for market players’ opinions on Adani.

Adani listed US banks Citigroup and JPMorgan Chase & Co. in its response on Sunday, along with other lenders BNP Paribas, Credit Suisse, Deutsche Bank, Barclays, and Standard Chartered, as well as its relationships with local and foreign banks and its access to a variety of funding sources and structures.

The collapse of the stock market is a severe defeat for Adani, 60. Before slipping to ninth place on the Forbes list on Monday, the school dropout’s astonishing rise included over 1,500% increases in some of his group stocks over the course of three years, giving him the third richest man in the world.

Hindenburg responded to Adani’s statement by saying that it “essentially verified our findings and ignored our critical questions.”

According to Hindenburg’s research, shares of seven Adani listed firms have an 85% downside due to what it dubbed “sky-high valuations” and “significant debt” at Adani enterprises.

In its answer, Adani claimed that its group firms had “consistently de-levered” during the previous ten years.

(Adapted from LiveMint.com)