The six degrees of Lev Leviev

Ramat Gan, Israel—First came the notion of "six degrees of separation," which holds that everyone in the world is connected by six or fewer stagesofcircumstance or acquaintance.

Then came its pop culture spinoff, "six degrees of Kevin Bacon," positing that the Footloose star is somehow linked to everyone in the entertainment industry universe. Now there's "six degrees of Lev Leviev."

Over the past few years, the Israeli diamond tycoon has struck so many partnerships, joint ventures and marketing agreements that he's become the endpoint in dozens of diamond-related deals. A former Diamond Trading Co. sightholder, Leviev is now seen as De Beers' biggest competitor—not only in the rough market, where he wields influence due to his plum projects in Angola and Russia, but also within the luxury brand arena, thanks to his four-month-old 50-50 joint venture with retailer Bulgari.

"In shortsightedly expelling Lev Leviev from its list of clients in March 1995, De Beers gave Leviev the stimulus he needed to expand worldwide," says Richard Wake-Walker, who is the cofounderofWWWInternationalDiamondConsultants. "Leviev now enjoys nearly half De Beers's market share."

World's biggest polisher

The billionaire is connected to the greatest number of people in the diamond trade through LLD Diamonds, a fully-owned subsidiary of the Leviev Group that holds the distinction of being the world's largest polished diamond manufacturer. The company ranked No. 1 on the list of Israel's polished diamond exporters for the third year in a row in 2003, with $570 million in exports, up from $514 million in 2002. Its turnover reportedly exceeds $2.5 billion.

LLD's reach extends to corners of the diamond trade that, at first glance, seem at odds with each other. Take, for example, M. Fabrikant & Sons, a fifth-generation diamond wholesale business based in New York, which recently announced it had teamed up with LLD to distribute round brilliant-cut diamonds polished in LLD's factory in America. The agreement grew from a 2-year-old partnership between the diamond behemoths to distribute fancy-shape diamonds 90 points and smaller.

At the other end of the size spectrum, LLD also maintains a sizable interest in the Vivid Collection, a New York-based retail operation specializing in large, rare diamonds.

Leviev stepped in after the company opted out of the wholesale sector in 1999. Now Vivid positions itself as the "prestige arm" of LLD Diamonds—an arrangement that benefits both sides. Vivid gets access to Leviev's best diamonds and Leviev gets to add a top-shelf diamond company to his vast, varied collection.



"From mine to mistress"

But these are hardly his only links to the U.S. market. A media-shy figure who probably spends more time on a 747 than in his home base of Israel, Leviev likes to boast that he alone maintains interests at every stage of the pipeline.

"I am the only vertically-integrated diamond dealer in the world," Forbes magazine quoted him as saying in a multi-page profile that ran in 2003. The Economist reiterated the same conceit—that Leviev is involved with the diamond industry "from mine to mistress"—in a long opinion piece in its July 15 issue.

Within the last year, Leviev's efforts at both ends of the supply chain confirm his commitment to building a diamond empire. The Bulgari connection promises to strengthen his footing in the luxury retail sector—and put him head-to-head with De Beers LV, the miner's joint venture with LVMH. On the mining front, Leviev has projects simmering in Russia, Angola and Namibia, where he recently opened the continent's largest diamond cutting factory.

"[Leviev] already has a cutting factory in South Africa, Equity Cutting Works," says Charles Wyndham, a cofounder of WWW International Diamond Consultants. "This factory was supplied by De Beers but last year was one of the two factories that were dropped. Apart from being part of Lev Leviev, it is difficult to see on what grounds De Beers stopped direct supplies."

Leviev's foray into Namibia has put him uncomfortably close to De Beers, which subsequently announced that it was opening up a Diamdel branch in the capital of Windhoek to supply rough to non-sightholders. Analysts have speculated that De Beers is feeling pressure to help the local government grow value-added industries, and is trying to undermine Leviev's grand gesture the best way it knows how.

Meanwhile, Leviev continues to expand his network. Who knows what companies lie within his future sights? As the ventures pile up, it seems clear that six degrees of Lev Leviev is not entirely accurate. Three degrees may be more like it.