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UPDATE 2-Australia's Vocus gets $1.7 bln approach from Affinity, matches KKR bid

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* Vocus says to grant due diligence to both suitors

* Shares rise on hopes for bidding war (Recasts and adds investor comment)

SYDNEY, July 11 (Reuters) - Australian internet provider Vocus Group Ltd said on Tuesday a second private equity firm has made a A$2.2 billion ($1.7 billion) takeover approach, sending its shares higher on hopes for a bidding war.

Vocus said Affinity Equity Partners (S) Pte Ltd has matched an informal offer of A$3.50 per share from KKR & Co LP and that it would open its books to both suitors for due diligence.

The emergence of further interest in Vocus brightens buyout prospects for a firm which has seen its share price slide in the wake of a May profit warning as it struggles to make the most of acquisitions bought in a three-year $2.4 billion shopping spree.

The A$3.50 per share offers are roughly two-thirds below its stock price a year ago.

"With discussions now officially non-exclusive, and firm interest from a second party established, we are confident a true fair value price discovery process can begin," said David Pace, portfolio manager at Greencape Capital, Vocus' biggest shareholder, in an email.

Shares in Vocus, which owns a host of internet infrastructure assets and has Australia's No. 4 internet customer base, rose 3 percent to A$3.53 by late afternoon.

A spokesman for KKR was not immediately available for comment, while a spokesman for Affinity which has offices throughout Asia, declined to comment.

Vocus said in a statement it wouldn't comment further on either indicative bid.

While Telstra Corp Ltd dominates Australia's telecommunications and internet markets, smaller rivals like Vocus are jostling for exposure to a government-led A$40 billion ($30.44 billion) nationwide broadband network.

In addition to internet service provider iPrimus, Vocus has been expanding its physical assets, including the $650 million takeover of a firm building a 4,600 km (2,900 mile) undersea fibre cable between Singapore and the city of Perth.

($1 = 1.3151 Australian dollars) (Reporting by Byron Kaye, Tom Westbrook and Jamie Freed; Editing by Richard Pullin and Stephen Coates)