* DUET shares trading at 8.3 percent discount to bid price
* New Australian body heightens risk of rejection - bankers
* Local ownership requirements could be imposed - bankers (Recasts, adds analyst and fund manager comments)
By Jamie Freed
SYDNEY, Jan 24 (Reuters) - Australia's new infrastructure oversight body is fuelling concerns Hong Kong's Cheung Kong Infrastructure Holdings' (CKI) $5.5 billion bid for DUET Group will be blocked or modified, pushing shares in the energy firm lower.
Australia on Monday announced the formation of the Critical Infrastructure Centre, which will check whether foreign-led bids for key assets, including power grids and ports, pose any national security risks. investment bankers with experience in the infrastructure sector told Reuters they believed the new body increased the prospect the DUET deal was unlikely to be given the green light from the Australian government in its current form.
The bankers, who are not directly involved with the deal and declined to be identified because they were not authorised to speak with media, said at a minimum, local ownership requirements were likely to be imposed on some of the assets.
CKI 1038.HK was not immediately available for comment, while a DUET DUE.AX spokesman declined to comment. The new government body has yet to comment on the deal.
DUET's share price fell as much as 3 percent to A$2.76 on Tuesday, a discount of more than 8 percent to CKI's offer.
DUET's shares were now down nearly 6 percent over the past week, as the market prices in the increased risk that the deal could be rejected or modified.
"People do feel a bit nationalistic about this type of thing," Morningstar analyst Adrian Atkins said of the assets.
Last August, Australia blocked CKI and State Grid Corp of China STGRD.UL from buying Ausgrid, the biggest power grid in the nation's most populous state, on national security grounds - leading to a rebuke from China which called the move protectionist.
After that decision, the government said no single foreign investor would be allowed to own more than 50 percent of the stake available in a smaller power grid, Endeavour Energy and a local investor must hold at least 20 percent. power grid United Energy in the state of Victoria is a similar asset to Endeavour.
DUET also owns the Dampier-to-Bunbury gas pipeline in Western Australia, which transports fuel for half of the power generation in the country's biggest export state, as well as a gas distributor, Multinet, in Victoria.