CALLUNA, a Fife-based designer and manufacturer of miniature hard disk

drives for the computer industry, is to float on the Unlisted Securities

Market this month with the aim of raising around #10m in new money.

The placing, one of the last before the USM closes to new entries at

the end of the year, should value the company at around #50m.

''We saw this last month or so of the USM as a window of opportunity

for us to raise the kind of capital we need to fund expansion and

perhaps pave the way for a full listing a few years further on,''

finance director Donald MacDonald said yesterday.

Founded by former Rodime executives only three years ago, the

Glenrothes company does not have the required track-record, size or

financing to make a full Stock Exchange flotation feasible.

''We're confident there will be enough interest from institutions and

private clients of the sponsors to make the flotation a success,'' said

Mr MacDonald, adding that ''road shows'' to potential investors will

begin next week.

Using its patented Callunacard to spearhead its sales campaign, the

company specialises in 1.8-inch hard disk drives -- the size of credit

cards -- which are slipped into the new generation of hand-held notebook

computers.

The card is designed to be compatible with the new industry standard

aimed at facilitating the use of such cards in many different computer

systems and other hi-tech applications.

Calluna is poised to develop a disk capable of storing 260 megabytes

-- more than three times the capacity of the pioneering model introduced

to the market two years ago.

Management is convinced the market, particularly in the US, is set to

boom and they point to industry forecasts of three million unit

shipments of the 1.8-inch disk standard by 1997 compared with 50,000

last year. Around 5,200,000 notebook computers will be made next year,

according to industry analysts.

''We will target the so-called OEM (Original Equipment Manufacture)

business which involves some of the giants of the computer industry and

have opened a sales office in San Jose with this in mind,'' Mr MacDonald

said.

Around 40 people are currently employed at the Glenrothes plant which

includes two linked clean rooms with a manufacturing capacity of 150,000

units a year. The plant's modular construction allows for easy expansion

to 450,000 units.

Turnover is less than #1m a year though the company believes it is at

the take-off point and recruitment for another 30 staff is already under

way.

Calluna has already attracted funding from institutions like the 3i

capital investment group and Scottish Enterprise. They were drawn by the

technical experience of managing director Norman White who made his name

with Rodime, a leading disk drive company in the eighties.

The flotation is sponsored by Albert E Sharp, a Birmingham-based

broker and finance advisory group with close links to hi-tech

industries.