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The storm waves washing over Africa Israel and its controlling shareholder Lev Leviev don't even touch Nadav Shahar. At least so far. Africa Israel Industries, the company he runs, didn't get into trouble with huge projects like sister company Danya Cebus, and it isn't particularly affected by the real estate downturn or even the world credit crisis, which are hurting its parent company, Lev Leviev's Africa Israel.

It is, however, affected by the state of the world economy, which explains why Africa Israel Industries' stock has fallen by 50% this year. But Shahar is convinced the share price will rebound.

"The market is in defensive mode, and at such times it doesn't always price shares properly," he says. "In the long term I see great potential. We have kept all the promises we made to shareholders a year ago. Our bonds are trading at attractive yields. Africa Israel tried to repurchase Africa Israel Industries stock from institutional investors and they didn't want to sell."

Shahar, 48, managed Salt Industries for seven years, when it was owned by the Dankner family. Eighteen months ago he received a mission from Leviev: Build an industrial arm for Africa Israel based on Packer Plada, a steel company in which Africa Israel had owned a financial (meaning, not strategic) interest for 15 years.

Since then Shahar has been raising capital, merging subsidiaries, buying and selling operations and revamping management. He's also been forging strategy and vision.

Packer Plada had been owned by the Packer family: Africa Israel had owned a minority stake. In September 2006, Africa Israel obtained a 57% interest, paying the Packers NIS 75 million to go away. Later it increased its stake to 68% and took over controlling interests in Packer Plada's subsidiaries too. Even later it bought out the remaining shareholders - the Cohen family - and now owns 100%. Shahar then replaced all the subsidiaries' managers and founded an "international division," changing the new empire's name from Packer Plada to Africa Israel Industries.

Africa Israel invests in a host of sectors, most famously in real estate, but it sees a growth driver in industry too. Shahar predicts a boom in traditional industries over the coming decade. Technology will increase productivity per worker, he says, so he received a mandate from Leviev to carry out acquisitions in Israel. Which he did.

Foreseeing the markets' meltdown, Africa Israel Industries raised NIS 550 million from investors for acquisitions (NIS 200 million from Africa Israel itself).

"In my experience, Lev lets his managers do the work," Shahar says, possibly refuting whispers that Leviev is very controlling. Shahar does add that Leviev wants to know every detail about every deal, but he doesn't interfere in the daily management. "He gives his managers space. If he likes something he nods. Until you come to Africa Israel, you don't discover the true meaning of working in Leviev's sphere. He gives a tremendous feeling of confidence that you can do great things without being afraid of financing them."

To what degree is Leviev involved in day-to-day management?

"I'm not in daily contact with him, but we do talk and meet in Israel and in Russia. He recently joined me in a tour of our site in Moscow. He likes to say, 'If you believe in something, go for it big-time, fight to acquire control and don't get upset if the results aren't as good as expected in this or that quarter.' He said to me, you have to keep initiating even if not everything works out."

One of the CEOs you replaced, Amir Rapaport of Negev Ceramics, didn't like being fired.

"Negev makes ceramics, but in my view it's chiefly a retail company with a chain of stores. Because of the increasing scope of construction in Israel and the rising standard of living, we realized that the growth driver wouldn't come from making floor tiles, but from increasing retail activity, meaning, selling to people renovating their housing, buying second-hand apartments or new ones.

"Negev had started to go in the right direction years ago and had increased revenues considerably, but it hadn't translated that into profits."

Rapaport didn't agree with Shahar's view of retail as key. But Shahar believes that the CEO serves the shareholders first and foremost: That's what he's paid to do. Rapaport lost a court battle to increase his severance compensation, Shahar adds: "I'd told him in advance that he'd get every penny he was due, and one shekel more."

Under its new CEO Avi Motola (formerly CEO of Best Buy), Negev redid its stores, moved some to better locations and added new outlets. The company expanded its range of products and expanded production capacity at its Yeruham plant. It invested in its computer system and in customer service, and aims to net NIS 16 million to NIS 18 million this year.

True, Shahar admits that positioning Negev Ceramics as a luxury chain, not a cheap one, isn't quite the thing if the market slides into recession. Its answer is to emphasize "value for money," for which it set up a sub-chain for lower-cost items operating at Ace stores.

But Shahar agrees that Negev ventures in South Africa and Los Angeles, opened with Israelis living there, aren't selling too briskly. "So we decided to focus on countries where the Negev brand has a relative advantage - Romania and Russia."

How's that? Because Israeli developers are swarming in both and they knew Negev, Shahar explains. They're also geographically close to Israel and a lot of the dealing can be done right here.

"For example Moti Zisser's Plaza Centers buys our products, and so does Adama," Shahar says. Negev has a store in a fancy Bucharest neighborhood and is starting to supply marble to the east coast of the United States. However, because of the soggy state of the U.S. housing market these days, the company decided not to expand there right now.

What about the traditional steel industry?

Africa Israel Industries doesn't see much room to grow in Israel, mainly because it already has such a large share of the steel market. The potential lies abroad, says Shahar. "We decided to focus on steel processing and marketing in fast-growing countries such as Russia. In the future we'll expand to China too."

Meanwhile, the company sold steel-related holdings in Romania and Bulgaria, seeing meager growth potential there. And in any case, it hadn't owned controlling interests, which didn't suit Africa Israel Industries' strategy. It did buy a company that paints steel and the goodwill of an iron company. Shahar isn't banking on steel prices staying as high as they are today: He smells a whiff of "the thin air of great heights."

But his company sees great potential in Russia; a year ago it bought Koa Gas for $25 million, mainly because of its 260 dunams of land near Moscow, a site that comes replete with train tracks and connections to electricity and natural gas, not to mention its own water wells.

Where will Africa Israel Industries be in five years?

"Our activity in Russia will accelerate. Negev Ceramics will have doubled in size," predicts Shahar. "The group companies will be more profitable and we may get into other industries too, such as plastics."