INTERVIEW-UPDATE 2-Daiwa Sec eyes $4.5 bln private equity fund

(Adds comments from Daiwa CEO)

By Junko Fujita and Emi Emoto

TOKYO, Aug 12 (Reuters) - Daiwa Securities Group Inc (8601.T), Japan's second-largest brokerage, said on Tuesday it may set up a $4.5 billion private equity fund as it seeks to diversify further beyond stocks, bonds and investment banking.

Daiwa Securities Chief Executive Officer Shigeharu Suzuki told Reuters in an interview that the fund would be separate from another that Daiwa operates using its own cash and that it is also seeking to expand.

"This market will definitely grow bigger. There will always be trade in assets," Suzuki said.

"Who will profit most from this? That would be those making the investments, rather than the investment banks advising on the deals."

The new 500 billion yen ($4.5 billion) fund could be set up in three to four years, he said.

Daiwa Securities SMBC Principal Investments, the unit that makes investments with Daiwa's own cash, has spent 436 billion yen investing in private equities, real estate and non-performing loans.

Daiwa wants to cap this amount at about 600 billion yen to avoid risk.