FORTUNE — J.P. Morgan Chase & Co. (JPM) is in advanced talks to sell a large portion of its private equity holdings to investment firm Lexington Partners, Fortune has learned.
The deal would involve the existing portfolio of One Equity Partners, an in-house private equity group that would spin out of J.P. Morgan as part of the transaction. Lexington also would commit between $600 million and $1 billion to One Equity Partners, so that it could make new investments.
J.P. Morgan first began the spin-out process last summer, as part of the bank’s effort to de-emphasize balance sheet investing. The original idea was to package OEP’s portfolio alongside other bank positions in third-party private equity funds, with the entire portfolio being valued at approximately $4 billion. That effort stalled, however, and Lexington was among at least two firms to express interest only in the OEP assets.
No word on price yet, except that Lexington offered to pay a premium to net asset value. It also is important to note that the deal is not yet finalized.
OEP reports 34 current portfolio companies on its website, and typically invests between $50 million and $500 million per transaction.
Lexington Partners is in the midst of raising upwards of $10 billion for its latest private equity secondaries fund, and also has fund-of-funds and co-investment efforts.
Both J.P. Morgan and Lexington Partners declined to comment.
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