Vicinity proves Chinese wall is strong at Credit Suisse

Joe AstonColumnist

Jun 2, 2020 – 11.41pm

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Fear not, the Chinese wall at Credit Suisse Australia is sturdier than ever!

Only on Friday, the investment bank’s REITs analyst Peter Zuk issued a note on Vicinity Centres, upgrading the stock to outperform and talking down the likelihood of “a defensive equity raising as [the company’s] and existing investors’ least-preferred capital management initiative, given the dilutive impact at current pricing” of $1.61 per share.

On the wrong side of the wall: Credit Suisse's REITs analyst Peter Zuk.

“An equity raising is clearly not management’s preference at this stage given where the share price is trading”. What’s more, Zuk claimed that “a discounted (and dilutive) equity raising would not be welcomed by existing investors. If need be, we suspect investors would prefer [Vicinity] cut its dividend or sold assets as capital management alternatives”.

Come Monday morning, Vicinity announced a dilutive $1.2 billion placement at $1.48 per share, the offer at an unwelcome discount of 8 per cent. The brokers on the placement were Macquarie Capital and … Credit Suisse!

They’d even spent the weekend sounding out the pointy end of the register. Turns out Zuk, sitting across the corridor in Sydney's Gateway building, suspected wrong.

That, right there, is institutional brokerage working just as ASIC intended it to. Humiliating, isn’t it?

Joe Aston has helmed The Australian Financial Review's Rear Window column since 2012. He is based in Los Angeles. Connect with Joe on Facebook and Twitter. Email Joe at joe.aston@copyright link