Novitas, a UK-based new firm specialised in lending to divorce clients, has launched a fund aimed to cover the costs of break-ups.

The people behind the Novitas Divorce Litigation Fund intend to raise £5 million ($7.8 million) from investors and pay them an annual return of 8 per cent.

The firm estimates an average cost of a divorce in London of £40,000 per side. The new fund will lend to people to meet the legal fees and other expenses during the process.

High net worth financial advisor Jason Reeve will be lead fund manager on the fund. "The reduction in banking credit, coupled with the government cut backs to legal aid, means that people seeking a divorce can face a hefty financial burden,” said Reeve.

The number of divorces is on the rise and stood at 120,000 in 2010 in England and Wales, 5 per cent higher than the year before, according to Novitas. The firm, which was set up last year, said that the total size of the divorce lending market in the UK is worth £100 million a year.

The Novitas Divorce Litigation Fund is targeting lending on individual cases of between £5,000 and £100,000 with £250,000 as the ceiling, with average loan duration of 12 months.