UPDATE 2-Battle heats up for Australia's Infigen as suitors raise bids

* Iberdrola sweetens bid 3 cents to counter UAC's improved offer

* UAC Energy hikes offer price by 6 cents per share

* Infigen shares rise 4%, topping Iberdrola offer price (Adds comments, background, details on both bids)

By Shriya Ramakrishnan and Shashwat Awasthi

June 29 (Reuters) - A bidding war for Australian wind and solar firm Infigen Energy IFN.AX heated up on Monday, with Spain's Iberdrola IBE.MC raising its bid to A$856 million ($589.1 million), shortly after Philippine conglomerate Ayala Corp AC.PS hiked its offer.

Philippines-based UAC Energy, a joint venture of Ayala's AC Energy ACEPH.PS and Hong Kong-based UPC Renewables Group, revised its cash offer to A$0.86 per share from A$0.80 per share earlier on Monday, matching Iberdrola's IBE.MC initial bid.

UAC also declared its bid free of conditions which had irked Infigen. responded immediately by sweetening its offer by 3 cents to A$0.89 a share, a touch above Infigen's close on Friday of A$0.885, valuing the renewables firm at A$856 million.

Infigen shares jumped 4% to trade at A$0.92, indicating investors expect both suitors to improved their bids.

Infigen said it was considering developments on both the offers and advised shareholders not to take any action.

Analysts had forecast a bidding war as the firms tussle for Infigen's seven wind farms and a large pipeline of projects which it recently put on hold.

Iberdrola and UAC pounced on Infigen after its share price slumped due to falling power prices in Australia and challenges facing wind and solar firms hooking up projects to a shaky grid.

UAC has already secured approval for its bid from Australia's foreign investment board, at a time when the country has introduced tougher policies to monitor foreign investments as interest rises for troubled Australian assets in the wake of the coronavirus pandemic. earlier backed Iberdrola's offer, as the bid from the Spanish company was 7.5% higher with fewer conditions.

"We think that Iberdrola may need to reduce the conditions in its offer or offer a higher offer price in order to make its offer clearly superior and retain the Infigen recommendation," RBC analysts said in a note. ($1 = 1.4531 Australian dollars)