Richard White drama presents new customer and succession risk to WiseTech: Citi

Sensational allegations around WiseTech’s billionaire founder Richard White could derail new customer signings at the logistics software giant and underscores a potential succession drama at the $36bn company, Citi analysts say.

WiseTech CEO Richard White and wellness entrepreneur Linda Rogan have settled their legal fight but an ‘overhang’ remains. Picture: NewsWire

Sensational allegations around WiseTech’s billionaire founder and chief executive Richard White could derail new customer signings at the logistics software giant and underscores a potential succession drama at the $36bn company, Citi analysts say.

WiseTech’s shares tumbled almost 19 per cent – wiping billions off dollars off its market value and Mr White’s personal fortune, following allegations involving Mr White and ex-lover Linda Rogan – before breaking a five-day losing streak on Tuesday.

Citi analyst Siraj Ahmed said the legal action involving Mr White and Ms Rogan – which, although the pair have settled, has sparked further claims involving other women – so far appeared confined to the billionaire’s personal life.

But he maintained a neutral rating on WiseTech’s shares, saying it was “too early to step in” and warned of a potential hit to new customer signings of the company’s Cargowise platform.

“While we do not expect the reports to have an impact on near-term earnings, we expect it to be an overhang until a resolution becomes clearer and reiterate our neutral call,” Mr Ahmed wrote in a note to investors.

“We see this as a more of a valuation multiple issue, especially given the elevated multiple that WiseTech trades on, and we don’t see much risk to near-term earnings. Specifically, we don’t expect it to impact usage of the Cargowise platform or the take-up of new products by existing customers, but it could result in potential delays to new customer signings – which is not a key driver of near-term earnings.”

CLSA said the perceived risk from allegations involving Mr White had “created sufficient noise to spook some investors”. But this also “creates a buying opportunity”, with the company’s fundamentals are “still strong”.

Mr White had tried to bankrupt Ms Rogan over a $91,000 sum she spent on luxury furniture at a Sydney mansion he allegedly bought for her in 2022, before their affair was discovered by his now wife, Zena Nasser.

Jennifer Riches.

The allegations prompted a second woman, psychologist Jenna Riches, to come forward, accusing him of allegedly offering business advice in exchange for sex. It was also revealed he bought a house for another businesswoman he was allegedly in a relationship with, Marcia Kensell, in Sydney’s Lane Cove in 2018. A falling-out between the pair led to her taking legal action, but it’s understood they have now settled confidentially.

Mr Ahmed the “key risk” to investors would be if Mr White – who owns more than 35 per cent of WiseTech – was forced to leave the company.

“Our investor conversations have so far focused on whether the allegations are personal or company-related. Investors to date have noted that allegations have been personal in nature, but are remaining watchful as to whether further issues come up that could be company-related,” Mr Ahmed wrote in a note to investors.

“The key risk to consider, in our view, is Richard White potentially having to leave the company and whether the current growth trajectory can be maintained, will his departure be disruptive to the management team, and will his significant shareholding become a share price overhang.”

Mr Ahmed said Citi had believed that WiseTech’s succession planning would involve Mr White stepping away from chief executive duties to become an executive director or a “strategic adviser to ensure continuity of growth and performance”.

“Wisetech has an experienced senior-management team and we don’t expect a material impact on day-to-day operations. However, we do see Richard White as integral to the company, especially in terms of future strategy/direction and product road map.”

CSLA analysts Nick Basile and John Marrin upgraded WiseTech to outperform, saying “we take no view on the allegations but believe in a scenario where management change would be required, WiseTech would be strong enough to withstand it and ultimately thrive”.

The Australian Shareholders Association are pushing WiseTech’s chair Richard Dammery for more detail on succession planning at the company when it meets this week, saying it's key to ensuring continuity and managing “personal life events”.

ASA CEO Rachel Waterhouse said the issue of succession planning was important for every company, but there were particular issues facing companies which were led by their founder.

“Succession planning can be more challenging in a founder-led company compared to one with a long history of successive CEOs,” she told The Australian.

“It is an important topic that boards need to prioritise on their agendas, as it ensures continuity and provides flexibility for CEOs to take breaks and manage personal life events, such as injury, illness, or loss, without disrupting the business.”

A spokeswoman for Aware Super, which has 1.18 per cent of the company, said the fund was engaging with the WiseTech board over the situation regarding Mr White, who founded the company in 1994.

Originally published as Richard White drama presents new customer and succession risk to WiseTech: Citi