Celiant Corp. Moves Up And Out

What happens to portfolio companies after they receive venture capital financing? Curious? We were. So periodically, Private Equity Week plans to track the progress of venture-backed companies to satisfy your curiosity, and ours, by providing up-to-date reports on their status.

This week, we sat down with Celiant Corp.,which was recently spun out of Murry Hill, N.J.-based Bell Labs.

Spun out of Bell Labs in conjunction with Lucent Technologies Inc. in June, Celiant Corp. is fast becoming a mover and shaker within the wireless world.

To be sure, the Warren, N.J.-based start-up is more important to cell phone users than they probably realize. Currently, Celiant manufactures wireless power amplifiers, one of the three devices that makes cell phone reception possible. The amplifiers “enhance both the reach and quality of the sound transmitted to wireless terminals,” said Ralph Faison, Celiant’s president and chief executive.

In the near future, the company also has plans to start manufacturing radios and filters, the two other components that complete the cell phone reception circle.

Founded more than a year ago at Bell Labs, Celiant already has more than 1.3 million wireless power amps and modules in service worldwide. It also has an exclusive manufacturing contract with Lucent, which still retains a 50% stake in the company.

The infant firm finally broke away from its parent company when it became obvious that Celiant could supply all the parts to many the big original equipment managers (OEMs). “As the economy falls the big OEMs like Motorola, Eriksson and Verizon Communications are going to be looking to outsource this function because it will reduce their in-house head count. Everyone is looking for way to save money now,” Faison said.

What is more, he is banking on the fact that outsourcing may be an emerging trend in the OEM world.

He’s not the only one who thinks Celiant is onto something. The company also has been a big hit with venture capital investors.

Pequot Capital led a $50 million Series A financing for Celiant at the beginning of this month, investing alongside Credit Suisse First Boston Corp. Moreover, CSFB Chief Executive John Mack joined Celiant’s board of directors last week.

Mack, who began his career at Morgan Stanley in 1972 as a member of the firm’s bond department, was named president of that company in 1993. He joined CSFB in July.

Since closing its first round, Celiant has been busy moving from Bell Labs into its headquarters in Warren. It has also been interviewing candidates to fill out its senior management team.

Now that Celiant has its own digs, however, it plans to grow its business both organically and through acquisitions. The company, which already employs 200 workers – including 160 scientists – will be looking to quickly expand its sales and marketing force because it has already started meeting with prospective OEM clients.

Additionally, Celiant is looking to acquire other companies that produce radios and filters, which will help beef up its service offerings.

“This industry is ripe for consolidation. We’ve been looking at the entire space and talking to a number of companies for the last two and half months,” Faison said. “There are about 15 or 20 [companies] that would be of interest to us.”

He declined to comment on exactly how close Celiant might be to making an acquisition at this time.

It seems as though its currency for such transactions may be stock, as Celiant hopes its next round of capital will come from the public markets. It hasn’t yet set a date for a possible Wall Street debut, however, Faison said.

Danielle Fugazy can be contacted at: Danielle.Fugazy@tfn.com