April 3 (Bloomberg) -- Nikko Cordial Corp. shareholder Orbis Investment Management Ltd. stepped up its campaign to force Citigroup Inc. to raise a $13.4 billion takeover bid, offering its 5.8 percent stake in the market at a higher price.

The Bermuda-based fund manager offered 56.5 million shares in Nikko, Japan's third-biggest brokerage, at 1,900 yen ($16) on the Tokyo exchange.

Citigroup, the world's largest financial institution, last month boosted its bid for Nikko to 1,700 yen from 1,350 yen and ruled out further increases.

Orbis yesterday called Citigroup's offer "flawed" and suggested other shareholders could help force a better deal by following its example. Sell orders for a total of 71 million Nikko shares were made today at 1,900 yen, according to Instinet Japan Ltd., as some investors heeded that call.

"Orbis is sending a message to other shareholders that they shouldn't accept the offer and that they should wait for the chance that Citigroup may raise it again," said Fumiyuki Nakanishi, an equity strategist at Sumitomo Mitsui Financial Group Inc. in Tokyo.

Rockhampton Management (Hong Kong) Ltd. "echoes the sentiments expressed recently by Orbis" and will place a sell order for all its Nikko stock at 1,900 yen apiece. The fund holds more than 10 million shares, portfolio manager Chris Donegan said in an interview, declining to specify further. It placed some sell orders today, he said.

`Open Format'

Chicago-based Harris Associates LP sold part of its stake after Citigroup ruled out paying more. Harris, which said Nikko is worth at least 2,000 yen a share, now owns 6 percent. Citigroup's Tokyo-based spokeswoman Atsuko Yoshitsugu declined to comment.

Southeastern Asset Management Inc. of Memphis, Tennessee and Mackenzie Financial Corp. of Toronto have also said Citigroup's latest bid is too low. Together, the four institutions control almost a quarter of Nikko.

The sell orders of other shareholders who imitate Orbis's move "will be visible to the market in the order book of the Tokyo Stock Exchange," Orbis said in a statement. "This open format permits the marketplace to decide what the shares are worth."

Citigroup owns 4.9 percent of the company and has said the offer is conditional on winning at least a majority. Mizuho Financial Group Inc., which holds 4.8 percent, last month said it will tender its shares.

Shares in Nikko rose 1 yen to 1,686 yen. They have lingered at around that level since Citigroup announced its higher offer on March 13, suggesting investors don't anticipate another increase.

Some other Japanese shareholders are also rallying around the offer, Nikkei English News reported. Toyota Motor Corp., Odakyu Electric Railway Co. and Sumitomo Warehouse Co. are among companies considering selling their Nikko shares to the U.S. bank, Nikkei said, without saying where it got the information.

Excluding Citigroup, overseas investors controlled about 50 percent of Nikko as of Dec. 31. The company became a takeover target in January, when the Tokyo Stock Exchange threatened to delist Nikko after regulators uncovered an accounting fraud. The bourse last month decided against removing the stock.

By placing an order in the market at a set price and suggesting other investors follow suit, Orbis may also be signaling to Citigroup what it would take to push the offer through, said fund manager Hisakazu Amano.

"It will be an incentive for Citigroup to raise the offer as it can monitor how many shareholders will be willing to sell at 1,900 yen," said Amano, who helps oversee about $16 billion at T&D Asset Management Co. in Tokyo, including Nikko shares.

Citigroup's offer expires on April 26.