Adani's empire lost $100 billion in days: Where did it all begin?

Indian billionaire Gautam Adani's conglomerate has been trying to reassure investors after its flagship company called off its share sale Wednesday after the share price plunged. Adani Enterprises confirmed the $2.5 billion raised from the sale would be returned to investors.

The drop in share price is the latest in a series of surprises Adani Group has faced in the last few days since a tiny New York investment firm made fraud claims against its companies. Although Adani has denied the allegations, calling them "nothing but lies", the response hasn't helped substantially stem the uproar.

While $108 billion has been wiped off the group's companies' market value, Adani himself, who was the world's third richest man on Forbes real-time billionaires list less than two weeks ago, is now 16th, losing $48 billion of his personal wealth.

Where did it all begin?

Shares of Adani Enterprises were due to go on sale on 25 January. But just a day before that, US short-seller Hindenburg Research published a damning report accusing the conglomerate of engaging in decades of stock manipulation and accounting fraud.

In a 413-page response, the group said the report was driven by "an ulterior motive" to "create a false market" to allow the US firm to book massive financial gain.

There's more!

In the detailed rebuttal, Adani Group even called the allegations by Hindenburg "a calculated attack on India", its institutions, and its growth story. It said it had made the necessary regulatory disclosures and had complied with all local laws.

However, Hindenburg stood by its report and said the conglomerate had "failed to specifically answer 62 of our 88 questions."

How did the market react?

When the share sale kicked off on 25 January, it received a muted response. As retail investors stayed away, just 3% of its shares had been subscribed by the second day. But foreign institutional investors and corporate funds extended a hand of support. On 30 January, Abu Dhabi's International Holding Co., controlled by a key member of UAE's royal family, invested $400 million in the share sale.

What's next?

India's central bank, according to reports by Bloomberg and Reuters, has asked India's lenders for details of their exposure to the conglomerate.

"We haven't heard anything from the market regulator SEBI or the government till now," said independent research analyst Hemindra Hazari, expressing his surprise.

The issue has also triggered a political row. Opposition parties have asked for an investigation into Hindenburg's allegations, in addition to demanding a discussion in parliament about the risk to Indian investors.