Alex Shnaider cruises around in a Mercedes-Benz SLR McLaren, lounges on a 170-foot Benetti yacht and lives in a North York, Ont., mansion. But to enjoy those luxuries and amass his estimated $1.7-billion fortune, the entrepreneur, born in St. Petersburg and raised in Israel and Toronto, has taken risks few members of our Rich 100 would likely stomach.
In the early '90s, Shnaider worked as a commodities trader, buying steel from eastern European factories using everything from coal to microwaves as currency and selling it to other traders. The margins were high, but so were the stakes. At that time, Shnaider recalls, any lucrative industry in that part of the world was dangerous. “Competition was literally cutthroat,” he says, “and some people would do anything to take business away from you.” A savvy entrepreneur, Shnaider bought gifts for senior steel executives and, in some cases, hired their relatives. As well, he steered clear of politics. That may explain how he avoided the fate of seven steel execs who were reportedly assassinated in Ukraine in the '90s.
In 1994, he formed Midland Resources and registered the trading and holding company in Guernsey, the Channel Islands. His partner in the company is Eduard Shifrin, a well-connected and experienced trader with a PhD in metallurgical engineering. Shnaider considers teaming up with Shifrin as one of his best business decisions so far.
Another of his shrewd moves, Shnaider says, was participating in the industrial privatization in eastern Europe. In the late '90s, Midland began buying up shares of Zaporozhstal, a Ukrainian steel mill, and by early this decade owned 93% of it. Midland acquired that stake for roughly US$70 million and has reportedly since turned down offers of US$1.2 billion for the mill.
Today, Midland boasts US$2 billion in annual revenues, more than 50,000 employees spread across 34 countries and a diverse group of holdings, including stakes in Carnex, a meat-processing plant in Serbia; the Electric Networks of Armenia; and the planned 68-storey Trump International Hotel & Tower in Toronto. In January, Midland bought the Jordan Formula One team from Irishman Eddie Jordan for a reported US$50 million. With that foray into the glitzy arena of car racing, Shnaider plans to promote, among other things, Midland's auto-parts business.
Shnaider, 37, insists doing business in eastern Europe is much safer these days. Nevertheless, last year the car of the general director of a Midland steel mill in Montenegro was blown up, and authorities have yet to find the culprit. But for Shnaider, it seems, the rewards continue to outweigh the risks.