Calluna faces perils of new issues market

Calluna, the Scottish miniature disk-drive manufacturer, is braving the hostile market for high-tech new issues, raising pounds 10.1m to develop the next generation of memory devices for personal computers, writes Tom Stevenson.

At a placing price of 65p, Calluna will be valued at pounds 35m. First dealings in the shares on the USM are expected on 31 October. All the 16.9 million shares being issued are on behalf of the company, with management holding on to its 30 per cent stake.

The company was founded three years ago to exploit the growth in demand for 1.8in disk-drives, which are used to expand the memory of portable computers.

No bigger than a thick credit card, the disks have been adopted as standard by many computer manufacturers. The market for the disks is expected to increase from 678,000 in 1994 to 20.6 million in 1998.

Calluna's competition is restricted to three start-up companies in the US.

In the year to March 1994 Calluna made a loss of pounds 1.66m, which compared with a pounds 1.38m loss in 1993.