Warburg Pincus is selling a roughly $1.2 billion slice of Asian investments from one of its funds to secondhand buyers, said people familiar with the matter, a move that demonstrates how private-equity firms are using secondary market deals to reshape their portfolios and return cash to investors.

Lexington Partners and Goldman Sachs Group Inc.’s asset management arm are the largest buyers in the deal, which also includes other investors, the people said. These institutions will get a strip of the Asia deals that Warburg backed...