Bank of America Corp. is in the process of selling on the secondary market some $1.2 billion in commitments made to funds managed by Warburg Pincus LLC, according to several people familiar with the transaction.

The sale is part of an ongoing effort by the bank to reduce its exposure to private equity, these people said. In one of the larger secondary market transactions to date, Bank of America earlier this year sold a $1.9 billion portfolio of private equity fund interests to the secondary arm of French firm AXA Private Equity.

That deal included around $200 million of the bank's commitments to Warburg Pincus funds, made by Merrill Lynch before Bank of America bought it, one person said. AXA Private Equity declined to comment.

But a number of other commitments Bank of America has made, including ones to New York-based Warburg Pincus, are quietly going to a handful of other investors. Among them are New York-based Lexington Partners Inc. and sovereign wealth fund China Investment Corp., or CIC, two people said. Together, the two groups are poised to pick up around $600 million of the bank's $1.2 billion in Warburg Pincus commitments.

Bank of America, Lexington and Warburg Pincus spokespeople declined to comment, while CIC could not be reached for comment.

CIC would be a new limited partner for Warburg. Other potential buyers of the remaining Warburg Pincus stakes have similar profiles to CIC's, one person said: relatively new entrants to private equity, with plenty of capital available to commit over the coming years.

It's unclear exactly which Warburg funds in the portfolio are being sold. However, two likely candidates are the bank's stakes in Warburg Pincus Private Equity Fund IX LP, an $8 billion fund that closed in 2005, and Warburg Pincus Private Equity X LP, which wrapped up at $15 billion in 2008.

Merrill Lynch reported a $797 million carrying value for its stakes in those two funds, according to a recent filing with the Securities and Exchange Commission. The bank's actual commitments to the funds are probably higher than that, given that Fund X was less than halfway invested as of Dec. 31, 2009, according to performance data published by the Washington state's pension investment board.

Bank of America also owns a small stake in Warburg Pincus' management company, again acquired by Merrill Lynch before the merger with Bank of America in late 2008. The ownership stake is around 10%, people familiar with the bank said. Two of these people said that Warburg Pincus has the right to buy back the stake if it is put up for sale, known as right of first refusal.

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