Sept 18 (Reuters) - Marketing automation company Klaviyo on Monday increased the proposed price range for its initial public offering (IPO) due this week, targeting a fully diluted valuation of up to $9 billion.

Nearly 19.2 million shares will be sold, priced between $27 and $29 each, Klaviyo said in a filing. At the top end of the range, the offering would raise around $557 million.

Its earlier range was between $25 and $27.

The IPO, which is scheduled to price on Tuesday, is nearly 20 times oversubscribed because of investor demand, Reuters reported last week.

Klaviyo's hike comes after another IPO contender, Instacart, raised its price range on Friday.

"Instacart and Klaviyo were clearly cautious when they launched their IPOs. They kept the deal size relatively low, and the original price ranges left some clear room for upside," said Matthew Kennedy, senior IPO market strategist at Renaissance Capital, a provider of institutional research and IPO ETFs.

A strong debut from SoftBank's Arm Holdings last week raised hopes of a rebound in the IPO market, but the lukewarm reception to Neumora Therapeutics has tempered some optimism.

Unlike Klaviyo and Instacart, SoftBank had refrained from lifting the IPO price of its most valuable asset, chip designer Arm, as bankers argued it was better to leave the additional $1 per share - equivalent to about $1 billion in value - on the table, Reuters reported, citing sources.

Traditional U.S. IPOs have raked in more than $5 billion so far in September, according to data from Dealogic, making it the second-biggest month for such share offerings this year.

"We're seeing some pent-up demand for high-quality tech IPOs, and besides that, Klaviyo has a lot going for it fundamentally," Kennedy added.

In its IPO filing last month, the company had revealed a surge in revenue growth and profitability in its most recent quarter.

Klaviyo has lined up major asset managers as investors in its IPO: BlackRock Inc and AllianceBernstein LP have indicated an interest in buying up to $100 million worth of shares each, according to a regulatory filing.

Founded in 2012 by software engineers Andrew Bialecki and Ed Hallen, Klaviyo helps store and analyze data for e-commerce brands, enabling them to send out personalized marketing emails and messages to potential customers.

The company's customers include over 100,000 businesses in more than 80 countries.

(Reporting by Jaiveer Shekhawat and Niket Nishant in Bengaluru; Editing by Nivedita Bhattacharjee and Devika Syamnath)