Sussex-based Cadmus Group is offering an investment opportunity coupled with a chance to help consign the squalor of shared student houses to history.

A new company under the banner Little Red Homes (LRH) has been set up by Cadmus to meet the growing, and potentially profitable, demand for quality student accommodation in UK university towns and cities.

LRH is seeking between £2.5 million and £7.5 million from investors through a private share placing.

A facility with NatWest Bank will enable the company to gear-up on top of the share capital raised.

The issue opened on Friday.

Potential investors can visit the company's web site at www.the bigredhouseplc.com to view the prospectus and obtain a share application form.

The capital will go into constructing new, low concentration units containing between 40 and 80 furnished studiotype rooms, with ensuite bathrooms.

The houses will all be within walking distance of a campus, have a live-in manager and a secure entry system.

Cadmus Group managing director Howard Matthews said: "Our research, carried out with the help of students at several universities, confirms there is an aching need for this type of accommodation.

"If the Government achieves anything like its stated aim of sending 50 per cent of school leavers to university, that need will become ever more acute.

"For investors, the project provides a defensive position at a volatile time in the stock market."

To generate an initial rental stream while the new buildings are under construction, BRH plans to purchase some existing housing stock capable of being upgraded to the company's standards.

Shareholders will be paid a five per cent yield from year three and receive the full return on their investment, expected to be between 15 and 16 per cent year, when the project is completed in four to five years.

Application forms can be obtained by post from Little Red Homes plc, Cadmus Group, King Business Centre, Reeds Lane, Sayers Common, Hassocks, West Sussex BN6 9LS.