MAINLAND authorities asked some co-underwriters of the Tianjin Bohai Chemical public offering to take up shares offered to avoid an undersubscription, it has been revealed. Sources at the underwriting pool said that Peregrine Capital and S. G. Warburg had been asked by the Beijing authorities to take up a portion of the shares they had underwritten. Officially, the Tianjin Bohai Chemical Industry's 340-million H-share issue was oversubscribed 0.25 times. However, a source suggested the issue would have been undersubscribed if it had not been for the late applications which came as the offer was due to close. The Tianjin Bohai Chemical Industry's issue marks the weakest of the H-share subscriptions, receiving only 340.86 million share applications compared to Shanghai Petrochemical, the next lowest, whose $2.9 billion share issue last July was 0.74 times oversubscribed. The Tianjin Bohai public offering closed at noon on May 6 but the number of applications seemed to fall short of the amount offered early in the morning, sources said. Some of the co-underwriters received calls from the mainland authorities requesting them to file more applications. The issue's sponsor and lead underwriter, Jardine Fleming, said it had not been approached by the authorities to take up any positions. ''We are acting as an agency broking house. It is not our style to support the issue by taking up positions for ourselves before the offering has closed,'' said Gerry Yim, associate director of Jardine Fleming corporate finance. But one of the underwriters said: ''The mainland authorities' attempt to whitewash the subscription indicates its unrealistic attitude to H-share issues and a high expectation of the merchant banks. ''It is not facing up to the problems and still believes that everything about H-share listings must go right.'' However, Mr Yim said they were not aware of some co-underwriters being asked by the mainland authorities to take up the subscriptions. He added they had closely monitored the subscription and communicated with the Beijing authority throughout the offering. ''We have done our best as a sponsor and underwriter,'' said Mr Yim. Under the current underwriting system, the lead underwriters, Jardine Fleming and China Development Finance, an offshoot of the Bank of China, were to take up the shortfall in shares if the issue was undersubscribed. But they appear to have been bypassed, with the co-underwriters being asked to pick up the extra shares. The underwriting syndicate comprised eight co-underwriters and six principal sub-underwriters. One local merchant banker suggested there were two ways to prevent an undersubscription of an initial public offering. A simple method was for major shareholders to ask their ''friends'' to apply for the shares. Alternatively, underwriters would request their fund management divisions to subscribe to the shares. Under Stock Exchange of Hong Kong rules, underwriters can direct their associate operations, such as fund management arms, to acquire shares during the initial offer period and the information does not have to be disclosed. It is considered a whitewash or face-saving approach to subscribe for the shares at the last minute and take positions and sell the shares when they think the time is appropriate. Very often, the major shareholder or some financial advisers would be the market makers and the downside risk is therefore lessened. The Tianjin offer differs from the Shanghai Petrochemical issue last year in that Peregrine and Merrill Lynch, the sponsors and the global co-ordinators of the Shanghai offer, announced they had subscribed for the new shares. At that time, Merrill Lynch and Peregrine had both taken up 222.8 million shares in Shanghai Petrochemical at $1.58 each before applications closed. The two houses sold all the Shanghai Petrochemical shares in August last year when the Shanghai Petrochemical share price rose to $2.20 after plunging to a low of $1.45.