(Bloomberg) -- Canadian pension manager PSP Investments is trying to sell around $2 billion of private equity fund stakes, one of the largest such deals to enter the fast growing secondaries market.

The C$230.5 billion ($174 billion) manager, which looks after the retirement pots of the Canadian military and Royal Canadian Mounted Police, is seeking to rebalance its portfolio of buyout fund holdings and has approached secondaries fund investors to pitch for them, according to a person familiar with the transaction who asked not to be identified as the deal is confidential.

The portfolio includes funds managed by Bain Capital, Blackstone Inc, and CVC Capital Partners, the person said. The pension fund has around C$35 billion invested in private equity, according to its latest annual report.

A spokesperson for PSP Investments declined to comment. The pension manager recently appointed Deborah Orida as chief executive officer. Orida joined from Canada Pension Plan Investment Board where her roles included leading the global real assets investment team.

Second-hand sales of private equity stakes have grown in recent years. They offer a means for investors who want to cash out early from funds that can lock up capital for years. Around $28 billion of so-called limited partner-led secondaries deals were closed in the first half of the year, on top of some $63 billion of such transactions in 2021, according to Campbell Lutyens & Co.

Further stake sales seem likely. A recent survey of more than 350 institutional investors by Preqin found an increasing number planned to reduce allocations to private equity in part because they were overweight the asset class after a sharp sell off in public markets. 

“The hangover from post Covid-19 stimulus measures has combined with geopolitical events to create the perfect storm for risk assets in 2022,” Preqin said in the report. “This means some LPs are grappling with the denominator effect, leaving alternatives allocations higher as a proportion of total portfolio value, and allowing less room for fresh capital commitments.”

Earlier this year the California Public Employees’ Retirement System offloaded a $6 billion private equity portfolio, a move that allows it to sever ties with a slew of past managers and free up cash for new wagers.

(Updates with details on new CEO in fourth paragraph and stakes sales from the sixth paragraph)

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