* CKI offers A$3 per share, 28 pct premium to Duet's last trade
* Australia rejected separate bid by Li Ka-Shing's CKI this year
* Duet says board considering unsolicited, indicative offer
* Analyst sees potential hurdle in FIRB approval (Recasts throughout, adds comments, share price reaction)
By Tom Westbrook and Byron Kaye
SYDNEY, Dec 5 (Reuters) - Hong Kong's Cheung Kong Infrastructure Holdings 1038.HK made a $5.4 billion approach for Australian energy firm Duet Group DUE.AX , upping the pressure on Australia to soften its stance on foreign acquisitions following a string of knock-backs.
Four months after Australia blocked CKI's earlier A$10 billion ($7.4 billion) bid for control of state-owned energy firm Ausgrid on security grounds, Hong Kong billionaire Li Ka-Shing's firm returned on Monday with a play for the owner of the gas pipeline serving mining-rich city Perth. declined to comment, but its approach amounts to a major test for Australia's newly chilled approach to foreign entities buying crucial infrastructure.
Although CKI's all-cash indicative offer presented an attractive 28 percent premium to Duet's Friday closing price, the shares were trading 8 percent below the A$3-per-share offer price on Monday, an indication that investors considered the deal may be blocked in its current form by the Foreign Investment Review Board (FIRB).
"Given the situation with Ausgrid, it seems inevitable in our view for any transactions to occur moving forward for CKI it must co-invest with an Australian investor," Royal Bank of Canada analyst Paul Johnston said in a client note.
In a statement to the Australian Securities Exchange, Duet said its board was considering the proposal, which needs shareholder approval.
A source with direct knowledge of the proposed deal was optimistic about a successful outcome, saying the Australian government "wouldn't want to knock the same party back twice or they might not come back".
Duet's two biggest shareholders are pension fund UniSuper and boutique investment bank Lazard Asset Management Pacific Co, which together own 30 percent of Duet. They declined to comment.
FIRB also declined comment, while Australian Treasurer Scott Morrison, who oversees that agency, was unavailable for comment.
ESSENTIAL INFRASTRUCTURE
CKI already controls power grids in South Australia and Victoria, where Duet has other assets, and a nationwide gas distributor. The Hong Kong-based giant was also cleared by FIRB to buy another state-owned electricity grid, TransGrid, in 2015, although that asset went to a different buyer.
When FIRB blocked CKI from buying Ausgrid citing security risks, the Hong Kong firm said it believed the decision was not directed at it, a statement that implied Australia was more concerned about a rival bidder, Beijing-owned State Grid Corp of China STGRD.UL .
The asset ultimately went to two Australian pension funds.
Earlier this month, the government of Western Australia state, home to Duet's prized gas pipeline, said it would sell a majority stake in its A$15 billion electricity grid via a public float but reserved the bulk of the shares to Australian funds in order to allay foreign investment concerns. = 1.3443 Australian dollars)