Mobile ad hoc networking has been a hot research topic for a decade or so, and many paradigms have been making use of it. One of these paradigms is the Personal Networks (PN). It is an emerging concept where the user's personal devices form a virtual network which is secure and private, and reacts to changing environment and context intelligently. A fundamental property of the PN is that personal devices form private multihop clusters in an ad hoc manner whenever they come across each other. To this end, this paper presents a pair-wise key based scheme for forming secured private clusters in mobile ad hoc networks. The solution tackles the problem of node authentication combined with traffic encryption in relatively small ad hoc networks using proactive neighbour discovery and authentication. Additionally, the paper proves the feasibility of this solution by means of prototyping and experimental performance analysis.