UNDERWRITERS have been left holding $134 million worth of shares in Sun Hung Kai Hong Kong Industries' new spin-off, SHK Convertibles, after its $200 million public offering was heavily under-subscribed. Only 1,060 applications were received for 6.6 million of the 20 million shares being made available - just 32.7 per cent of the public offer. The remaining 13.4 million shares will now have to be taken up by underwriters Sun Hung Kai International, Paribas Capital Markets and principal sub-underwriters Deutsche Bank Capital Markets (Asia) and Oriental Patron Asia. The shares were priced at $10 each, representing a nine per cent premium to net asset value. A further 40 million new and existing shares are being placed privately with institutional investors. The total issue has raised $600 million for SHK Hong Kong Industries, which has retained a 25 per cent stake in SHK Convertibles. Applicants under the public issue have been told they will receive the number of shares they applied for in full. Dealings in the shares on the Hong Kong stock exchange is expected to begin on December 14. The spin-off company is to operate much like a closed-end unit trust, and is said to offer retail and institutional investors an opportunity to gain exposure to the increasingly popular convertible bond market. Analysts had wrongly predicted strong interest in the issue at retail level because of the recent keen interest in convertible bonds. SHK Convertibles holds stakes in seven convertible bond issues worth about $510 million showing vastly differing performances. The portfolio's best performer is Shell Electric Manufacturing (Holdings), which has a market price more than double the $2.10 conversion price. The worst is money-losing Hanwah Holdings, recently trading 44 per cent below its $1.75 conversion price. SHK Convertibles' investments will focus on Hong Kong industrial and service companies active in China, negotiating on a one-to-one basis with primary listed companies. It will have a limited life with redemption of all shares taking place at any time after April 1, 1997. Sun Hung Kai International managing director Peter Fung Yiu-fai said this would help prevent the stock from trading below its net asset value.