Two separate deals to fully resolve Yes Bank's bad debt issue and capital requirements is in the works, sources shared with Moneycontrol. The Carlyle Group Inc. (NasdaqGS:CG) and Advent International Corporation are said to be in talks with Yes Bank Limited (NSEI:YESBANK) to buy a minority stake and it's progressing hand in hand with the ARC (asset reconstruction company) carve out and its sale to stressed funds for which the bank is negotiating with Cerberus and JC Flowers. ARC deal is in final stages and could be announced soon, sources with direct knowledge shared.

Valuation of the equity deal will be in sync with the derived value of the bad loan via the ARC deal, sources pointed out stating that INR 500,000 million of bad asset is being carved out of which 70-75% has already been provided for by the bank. Sources shared that Cerberus and JC Flowers have bid for the ARC valuing the INR 500,000 million bad loan at around INR 110,000 million -130,000 million. Yes Bank had earlier said that transfer of bad loan to the ARC will be done by June this year.

The ARC deal will entail 15% of the derived value of bad loan as upfront payment to Yes Bank. Bank will in return buy a 20% stake in the ARC while 80% will be held by the stressed fund which wins the bid. In terms of the recoveries, Yes Bank will get about 85% of the net recoveries for which it will be issued paper as pass through collection.

Carlyle spokesperson told Moneycontrol, “cannot comment on market speculation.” Yes Bank, Carlyle, Advent, Cerberus, JC Flowers did not respond to query.