UPDATE 1-Bain in exclusive talks for Citi's Bellsystem-sources

* Bain retains exclusive right until Friday this week

* Bain last year bought audio equipment maker D&M Holdings

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TOKYO, Nov 4 (Reuters) - Bain Capital has won exclusive rights to negotiate with Citigroup Inc (C.N: Quote, Profile, Research) to buy its Japanese telemarketer in a deal that could be worth more than $1 billion, three people with knowledge of the transaction said.

It would be the largest private equity deal in Japan involving a foreign buyout firm since March 2008. [ID:nT121752]

Bain Capital will retain the right until Friday of this week, the people said, asking not to be identified because the bidding process is not public.

Permira [PERM.UL] and a team of CVC Capital and Blackstone (BX.N: Quote, Profile, Research) also made offers in the final round of bidding for Bellsystem24, which closed on Friday last week, the people said.

Bain Capital last year outbid Japanese private equity firm Advantage Partners for D&M Holdings, the maker of Denon audio equipment. Bain Capital opened an office in Japan in 2006.

The sale of Bellsystem24 initially drew strong interest from a number of private equity firms including Kohlberg Kravis Roberts & Co [KKR.UL], which teamed up with Itochu Corp (8001.T: Quote, Profile, Research) before dropping out of the bidding.