SYDNEY, Jan 23 (Reuters) - An Australian regulator is reviewing how pension funds value unlisted assets, ranging from private equity to office towers, as part of a long-term push to limit risks within the illiquid holdings popular in the A$2.5 trillion ($1.7 trillion) sector.

The Australian Prudential Regulation Authority (APRA) requested information from multiple pension funds in late 2023 as part of the review into unlisted asset valuation governance, according to a previously unreported November 2023 letter seen by Reuters.

The review is part of a broader focus on system-wide risk and covers commercial property, private equity and credit as well as potential liquidity risks associated with exposure to unlisted assets, the letter showed.

APRA declined to comment on the review. The A$160 billion Aware Super, Australia's third largest fund, said it had received a request for information relating to a review of unlisted asset valuations. AustralianSuper, the largest fund, also said it had received an information request.

Unlisted assets, ranging from wind farms and warehouses to private company shares, are popular in the pension sector and holdings can reach as high as 40% of all assets in some funds.

The review reflects long-standing concerns at APRA about how the sector prices these assets which rarely trade. A 2021 review found revaluation frameworks were "typically inadequate". New standards were introduced last July, including quarterly asset valuations.

However, a September study into how pension funds valued private equity stakes in Australian technology startup Canva found that while the majority of governance practices were appropriate, "several areas required improvement".

Funds need to provide information about how they value unlisted assets, in particular the board's role in the process, according to a source familiar with the request who declined to be named as they were not authorised to speak with media. ($1 = 1.5198 Australian dollars) (Reporting by Lewis Jackson; editing by Miral Fahmy)