Lord of the Manor

Celtic House's midas touch

A lot of people have advisers to help them invest their money. Some may have more than one: an accountant, a lawyer, a broker or two. Not many have a company, but Terrence Matthews, founder of Mitel and Newbridge Networks, has 21 professionals looking after only a small part of his wealth.

They work at Celtic House of Ottawa, a venture capital firm that invests in telecommunications, Internet infrastructure, storage and networking companies using Matthews money. He is the sole investor - $250 million - in the firms latest fund, says Andrew Waitman, managing general partner at the company.

Matthews should be pleased with the way Waitman, his partner Tom Valis, and Roger Maggs, a founder of Celtic House, handled the initial $25 million Matthews gave the firm to manage in 1994.

"We turned that $25 million into about $1.5 billion, although now its over a billion [dollars], the way the market has been," Waitman says.

They did it by putting seed money into 42 companies - 13 have been sold for a total of $2.6 billion, and six have completed initial offerings of public stock. The acquisitions include Abatis Systems, sold to Redback Networks in 2000 for $636 million; Cambrian Systems, a metropolitan Dense Wavelength Division Multiplexing vendor sold to Nortel Networks in 1998 for $300 million; and two companies, Skystone Systems and PixStream, sold to Cisco Systems for a total of $469 million in 1997 and 2000.

Matthews sold Newbridge, a carrier switch supplier, to Alcatel in 1998 for $7 billion. He founded the company in 1986 after selling Mitel, a digital private branch exchange vendor, to British Telecommunications. Matthews bought back part of Mitel in January for $233 million and has said he plans to put more research and development into it.

All the wheeling and dealing has made Matthews a very wealthy man, obviously. "He may be the richest Welshman whos ever lived," Waitman jokes.

Matthews owns Celtic Manor, in Newport, South Wales, one of Europes leading golf and convention spas. It has some 400 rooms, 32 suites and a 36-hole golf course. "Lore has it that Terry was born in a hospital on that land," Waitman says.

Matthews and Maggs, who lives in England, adapted the Celtic Manor name when they started Celtic House in 1994 to diversify Matthews investments. Waitman and Valis, who had a technology research firm in Toronto, were brought on board in 1996 to run operations in Canada.

Valis has a Ph.D. in photonics and has guided investments in that area. "Tom [Valis] helped design Cambrians products," Waitman says. "He has been an incredible asset in the last five years."

Among Celtic Houses current investments, Waitman is very keen on Synaxia Networks, a Mountain View, Calif., company that has designed a file server for networks running at gigabit speeds.

Celtic House generally invests $1 million to $5 million in seed rounds. "You cant get any decent lift to get a company to the next higher round of valuation" if the investment is smaller than that, Waitman says.

Celtic House will stay with a company and invest in multiple later rounds, he adds.