Shares of India's Adani Enterprises sank 20% on Friday as a scathing report by a U.S. short seller triggered a rout in the conglomerate's listed firms, casting doubts on how investors will respond to the company's record $2.45 billion secondary offer.

Seven listed companies of the Adani conglomerate - controlled by one of the world's richest men Gautam Adani - have lost a combined $48 billion in market capitalisation since Wednesday, with U.S. bonds of Adani firms also falling after Hindenburg Research flagged concerns in a January 24 report about debt levels and the use of tax havens.

The rout took shares of Adani Enterprises, the group's flagship company, well below the offer price of its secondary sale, which had initially been offered at a discount.

The Adani Group is concerned about the fall in share prices but continues to be in wait and see mode as the share sale continues until January 31, said two people with direct knowledge of the discussions.

India's capital markets regulator is studying the Hindenburg report and may use it to aid its own ongoing probe into offshore fund holdings of Adani Group, two other sources said. Spokepersons for the regulator and Adani had no immediate comment.

Adani Group has dismissed the Hindenburg report as baseless and said it is considering whether to take legal action against the New York-based firm. It did not immediately respond to a request for comment on the regulator's move.

With a net worth of $97.6 billion, billionaire Gautam Adani is now the world's seventh richest man, according to Forbes, slipping from the third position he held before the Hindenburg report.

Adani met the county's power minister R.K. Singh on Friday in New Delhi, according to a source familiar with the matter. The agenda of the meeting was not immediately known.

The billionaire hails from the western state of Gujarat, the home state of Prime Minister Narendra Modi. India's main opposition Congress party has often accused Adani and other billionaires of getting favourable policy treatment from Modi's federal administration, allegations the billionaire denies.

The stunning market selloff has cast a shadow over Adani Enterprises' secondary share sale that started on Friday. The anchor portion of the sale saw participation from investors including the Abu Dhabi Investment Authority on Wednesday.

"The sell-off is seriously extreme ... it has clearly dented the overall investor sentiment in the market,” said Saurabh Jain, assistant vice-president of research at SMC Global Securities.

Market worries extended to Indian banks with exposure to Adani Group's debt. The Nifty Bank index fell over 3 per cent, while the broader 50-share Nifty index was down 1.5%.

CLSA estimates that Indian banks were exposed to about 40% of the 2 trillion rupees ($24.53 billion) of Adani Group debt in the fiscal year to March 2022.

As of 0818 GMT, investors, mostly retail, had bid for around 320,000 shares of Adani Enterprises, or less than 1 per cent of the 45.5 million on offer, according to BSE exchange data. Bidding for retail investors will close on January 31.

The share sale is being managed by Jefferies, India's SBI Capital Markets, Axis Capital, and ICICI Securities among others.

The firm has set a floor price of 3,112 rupees ($38.22) a share and a cap of 3,276 rupees. But on Friday the stock slumped to as low as 2,721.65 rupees - well below the lower end of the price offering.

Shares of other listed Adani firms also plummeted, with Adani Transmission Ltd, Adani Total Gas, Adani Green Energy and Adani Ports sinking 20% each.

Adani Ports, Adani Green Energy and Adani Transmission marked their worst intraday drop ever, with heavy volumes.

'Sky-high valuations'

US dollar-denominated bonds issued by Adani Green Energy extended this week's sharp falls to just under 77 cents on the dollar to their lowest since November, Tradeweb data showed. The price was last down 7.32 cents to 77.007 cents.

In its report, Hindenburg said key listed Adani Group companies had “substantial debt”, putting the conglomerate on a "precarious financial footing”, and that “sky-high valuations” had pushed the share prices of seven listed Adani companies as much as 85% beyond actual value.

Billionaire U.S. investor Bill Ackman said on Thursday that he found the Hindenburg report “highly credible and extremely well researched.” Ackman had bet $1 billion against Herbalife Ltd starting in 2012, but exited his position at a loss.

Hindenburg said it held short positions in Adani through its U.S.-traded bonds and non-Indian-traded derivative instruments.

Adani Group has repeatedly faced and dismissed concern about its debt levels. It defended itself in a presentation titled "Myths of Short Seller” on Thursday, saying deleveraging by promoters - or key shareholders - was “in a high growth phase”.

Jefferies in a client note said it does not see material risk arising to the Indian banking sector from Adani Group's debt. Adani has said its debt is at a manageable level and that no investor has raised any concern.

The Adani conglomerate has been diversifying its business interests and last year bought cement firms ACC and Ambuja Cements from Switzerland's Holcim for $10.5 billion. ACC shares slid 15 per cent on Friday, while Ambuja plunged up to 25 per cent.