Adds analyst comment in paragraphs 5-6

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 £5.81 billion ($7.86 billion).

The £67.97 per share 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, if DCC can sell its Nexora technology unit for at least $800 million.

The Dublin-based 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 terms of the Nexora sale proceeds adjustment were yet to be agreed.

"The balance of power has flipped," said Angeline Ong, senior investments analyst at trading platform IG.

"Once diligence is done and paperwork is basically agreed, the bidder has spent months of time, fees, and reputation getting this close, so walking away now costs them a lot," she said, adding that DCC has room to push for a better price because of that.

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 before retreating to £62.90 by 1400 GMT, lagging the bid price.

DOUBTS REMAIN

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

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

However, major shareholders Aviva Investors and Fidelity International, had reportedly opposed the deal.

Aviva Investors did not immediately respond to a request for comment. Fidelity International declined to comment on the 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.

($1 = 0.7389 pounds)