NEW YORK - Chase Manhattan Corp. plans to sell between $1 billion and $2 billion of its investments in private equity funds managed by others in order to free up capital and make direct investments in start-up firms, a source familiar with the matter said.

Chase Securities, the capital markets unit of the $406 billion-asset banking company, is handling the sale, the source said.

Chase Capital Partners manages $20 billion of private equity investments, $5 billion of which is invested in 373 limited partnerships managed by firms such as Hicks Muse Tate & Furst and Bain Capital Inc. The company will sell only a percentage of its investments in various funds, the source said.

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