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Yes Bank plans to hive off its investment banking business into a separate subsidiary, Reuters (DNA) reports, quoting the bank's founder and CEO Rana Kapoor. This is likely to happen before March 2009. “We can even do it before that though it will not be until we build up scale and our track record,” Kapoor told the wire agency.

Yes Bank has been picking up quite a few capital raising initiatives or M&A deals recently. In November 2006, Yes Bank advised United Phosphorus in its $142-million acquisition of Cerexagiri, the crop protection unit of French chemicals company Arkema. Yes Bank was one of the advisors for Suzlon in its acquisition of German wind turbine maker REPower. It also advised Sintex Industries in acquiring the US-based Wausaukee Composites Inc for $20.5 million. Yes Banks' most recent deal was as advisor to InfrasoftTech when the latter secured $25 million funding from Baring Private Equity last fortnight.

Kapoor's logic is this: “We are doing big deals in investment banking and this (spinning the unit off) is the best way to attract better investors. Independent businesses make more sense." He said that the bank "plans to build a niche for itself" by focussing on companies in the knowlege economy and emerging corporates keen on fund raising and acquisition, and in outbound M&A. Yes Bank is also planning an entry into microfinance business. Kapoor also said that Yes Bank is planning a $100 million private equity fund, although details are not available. Yes Bank already has set up an agri business fund, which could have a corpus of $100 million.

Kapoor also said the bank is in "active discussion" with financial investors abroad to raise up to $120 million by diluting 6.7 per cent stake either through private placement of shares or through qualified institutional placement, Reuters reports.