Adds Fidelity declining to comment in paragraph 9, analyst comment in paragraph 10, context throughout; updates shares

By Shashwat Awasthi and Atharva Singh

July 16 (Reuters) - Private equity firms KKR KKR.N and Energy Capital Partners have sweetened their takeover bid for Ireland's DCC DCC.L for the second time in five weeks, the energy distributor said on Thursday, valuing it at up to £67.97 per share, or £5.81 billion ($7.86 billion).

The proposal retains a cash consideration of £65.25, a possible final dividend of £1.47 included in an earlier bid and adds a potential payment of up to £1.25 per share, if DCC can sell its Nexora technology unit for at least $800 million.

The Irish company, which distributes liquid gas, biofuels and renewable energy to businesses and households, did not say whether it would back the improved bid. The parties have until July 27 to finalise a deal.

The KKR-led consortium has completed due diligence and substantially agreed on deal documentation, DCC said, adding that the precise terms of the Nexora sale proceeds adjustment were yet to be agreed.

DCC has been divesting non-core assets to focus on its energy business.

DCC shares, which have gained more than 7% since the consortium's first approach in April, rose to as much as £63.80 on Thursday and were up 0.8% at £63.55 by 1002 GMT, lagging the bid price.

In April, DCC rejected the consortium's initial £4.95 billion proposal, saying it undervalued the company. KKR and Energy Capital returned in June with an improved proposal of £66.72 per share that DCC had signalled its support for.

However, Bloomberg and the Financial Times reported that two of DCC's largest investors, Aviva Investors and Fidelity International, had opposed the deal.

Aviva Investors did not immediately respond to a request for comment. Fidelity International said it would not be commenting on the consortium's latest proposal.

"Whether (the new bid) is enough to persuade one or two dissenters remains to be seen, given it only equates to a c.2% increase in the potential offer, and there is no guarantee of receiving it," RBC Capital Markets analysts said in a note.

In a separate update, DCC said first-quarter operating profit from continuing operations was ahead of last year and in line with expectations.

($1 = 0.7389 pounds)