Hot on the heels of the UK election and the float of Raspberry Pi (RPI) comes another highly-anticipated UK IPO (initial public offering), this time on AIM.

Rosebank Industries (ROSE:AIM) placed 20 million shares at 250p last week raising £50 million, yet as it stands the company has no assets, revenue or profits – instead it is a holding company set up to buy, improve and sell other companies.

If that ‘buy, improve, sell’ model sounds familiar, it is because Rosebank was set up by two of the former founders of Melrose Industries (MRO), Simon Peckham and Christopher Miller.

Together with David Roper, who isn’t involved with the new venture, Peckham and Miller took Melrose’s market value from £13 million when it listed on AIM in 2003 to £12 billion in 2020, in the process handing back $8.3 billion of capital to investors and generating a staggering 3,400% total return.

Those investors will be hoping the dynamic duo can repeat the process at Rosewood, where the model is to buy industrial businesses with an enterprise value (market cap plus net debt) of up to $3 billion suffering from temporary distress, fix them up and sell them on for a handsome profit.

Even though the firm’s only asset is cash, the placing was heavily oversubscribed as institutions scrabbled to own a slice of a business linked to individuals with a strong track record of success.

The shares soared to a 98% premium on the first day of dealing and jumped another 55% the following day valuing the business at almost £150 million or three times its worth pre-IPO.

Joining Peckham and Miller at Rosebank are four more Melrose alumni including finance director Matthew Richards, and the firm is chaired by Justin Dowley who currently chairs Melrose and Scottish Mortgage (SMT).

Using the same strategy they employed at Melrose, where the average return on equity for businesses sold was 250%, the Rosebank team aim to double their money on each deal in three to five years.

Trevor Green, head of UK equities at Aviva Investors, summed up the appeal: ‘The company has been set up by part of the original Melrose management team who coined the phrase ‘buy, improve and sell’, a model which they successfully delivered on for over a decade.

‘Their clear strategy has been a scarcity in the UK market as very few other managements have been so explicit in their intentions, which unsurprisingly has led to strong international investor support.

‘As shareholders in their new vehicle we await with interest their first move. Track records matter and theirs is a very long and illustrious one of creating shareholder value.’

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