Mumbai: Citigroup has raised its offer price for Japanese brokerage Nikko Cordial Corporation by 26 per cent to $13.4 billion following Tokyo Stock Exchange''s decision not to revoke the brokerage''s listing.

The exchange''s surprise ruling came as a blow to Citigroup''s move to use its leverage against a group of large North American shareholders who had opposed the bank''s initial offer as too low.

Citigroup says it''s now willingness to pay more for Nikko, its biggest Asian acquisition target, as it tries to expand into Japan''s asset management market.

A statement issued by Citigroup said it planned to make a fresh offer at ¥1,700 a share, against the initial ¥1,350 it offered last week.

The new offer which is a premium of 14 per cent to Nikko''s last closing price,.values Nikko at roughly ¥1.578 trillion ($13.43 billion).

The latest offer still falls short of the ¥2,000 a share demanded by most of the funds. Even before the stock exchange''s ruling, a group of US and Canadian investment funds that own about 25 per cent of Nikko had complained Citigroup''s first offer undervalued the firm by a third or more.

At ¥2,000 yen a share, Nikko''s valuation would roughly equal price to book value ratio of its two larger, more profitable rivals, Nomura Holdings Inc. and Daiwa Securities Group.

Nikko shares moved over 10 per cent above Citigroup''s original offer price in response to the Tokyo bourse''s decision. They ended at ¥1,490 yen, up 6 per cent from the previous close and the highest close since December, when Nikko''s accounting mess prompted the TSE to begin a review of its status.

Citigroup had insisted that it would stick to its original offer, hoping that the delisting threat would nudge Nikko to accepting its offer. The threat of delisting had also prompted credit rating agencies to downgrade the firm, dragging its stock to a low of ¥980 before reports of Citigroup''s interest emerged.

Standard & Poor''s, meanwhile, began a review of Nikko''s creditrating for a possible upgrade. The other global agencies, Moody''s and Fitch, began reconsidering their ratings after Citigroup unveiled its offer.