Gautam Adani’s businesses have lost US$107 billion ($139.8 billion) in a week, one of the biggest wipeouts in history, after an explosive report by short-seller Hindenburg Research shook his empire, forced him to pull a stock sale at the 11th hour and had some lenders reject his securities as collateral.

Adani, who last year became the world’s second-richest man with a US$147 billion fortune, has seen his own personal wealth plummet by around US$57 billion since Hindenburg accused his companies of fraud to inflate revenue and stock prices. After drawing money from the Middle East and other Indian billionaires to shore up a US$2.4 billion share sale, he then abruptly pulled it on Feb 1 to protect investors.

The tumult has become a national issue with lawmakers disrupting Parliament to demand answers from Prime Minister Narendra Modi’s government, given how closely Adani’s interests from ports to energy are intertwined with the nation’s growth plans. The big worry looming over the conglomerate is that lenders and other counterparties start to pare their exposure, while contagion fears spread to other parts of the markets.

While Adani’s company has rebutted the claims and the billionaire himself said in a video speech on Feb 2 that the scrapped equity offering will have no impact on operations, the selloff shows no signs of abating. The flagship Adani Enterprises sank as much as 30% on Feb 2, adding to a 28% tumble in the previous session.

In one sign of how risk perceptions are rapidly changing, units of Credit Suisse Group and Citigroup have stopped accepting some securities issued by Adani’s companies as collateral for margin loans. India’s central bank has asked lenders for details of their exposure to the indebted conglomerate, according to people familiar with the matter.

“The biggest risk is if Adani Group faces a severe deterioration in access to financing, particularly at its highly leveraged entities,” Leonard Law, a senior credit analyst at Lucror Analytics, wrote in a note. “That said, the group can likely continue to raise funds from onshore banks and bonds for now.”

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The extent of the damage to Adani’s empire may well depend on how Modi’s government responds. The prime minister has so far stayed mum on Hindenburg’s allegations, while the minister for tech and railways told Bloomberg TV that the economy can withstand the rout in Adani shares. Modi and Adani are widely thought to be close, though the tycoon has in the past said he has not sought any political favours.

Hindenburg Research last week accused the Adani group of “brazen” market manipulation and accounting fraud, claiming that a web of Adani-family controlled offshore shell entities in tax havens were used to facilitate corruption, money laundering and taxpayer theft.

The conglomerate has repeatedly denied the allegations, called the report “bogus”, and threatened legal action.

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“The fundamentals of our company are strong. Our balance sheet is healthy and assets, robust. Once the market stabilises, we will review our capital market strategy,” Adani said in his video speech on Feb 2.

The rout has dragged down the broader Indian market. As at Feb 2, the MSCI India Index, which includes eight of the group’s stocks, has dropped about 9% from a December peak, inching closer to a technical correction. Eight of the 10 worst-performing stocks in the MSCI Asia Pacific Index this year are Adanilinked companies.

“One has to be very watchful and investors would be well advised not to tinker with Adani stocks till there is clarity on the way forward,” said Alok Churiwala, managing director of Churiwala Securities. “The stocks may recoup some of the losses, but to come back to past levels, it’s going to be tough because they are going to be scrutinised even more.” — Bloomberg

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