* Private equity awash with funds
* PEP looking for new opportunities
* SAI terminates CEO after four months
* SAI open to discussions with PEP (Adds details on the deal, context)
By Byron Kaye
SYDNEY, May 26 (Reuters) - Australian private equity firm Pacific Equity Partners offered up to A$1.1 billion to take standards compliance business SAI Global Ltd private, the latest in a flurry of deal activity in the country sparked by surging stock prices.
PEP's indicative and non-binding offer for SAI, confirmed by both parties on Monday, follows two years of declining profits at the former commercial arm of Australian industry standards aggregator Standards Australia.
It also came as SAI said it terminated the contract of Chief Executive officer Stephen Porges, who started on Jan. 20, because of "fundamental differences of opinion between him and the board".
Shares in SAI jumped 17 percent to $5.02 by 03.00 GMT, their highest level in two years, but short of the range of PEP's indicative offer range of $5.10 to $5.25.
PEP, Australia's largest private equity firm, is on the hunt for new companies to turn around after having almost tripled the market value of cleaner-caterer Spotless Group Ltd last week in the country's biggest initial public offering in four years.
It also plans to exit paper products business SCA Hygiene Australasia in an offer worth an estimated A$800 million as well as Peters Ice Cream for an expected A$400 million, either by private sale or IPO.
Globally, private equity firms are aggressively pursuing investments having raised $95 billion in the first three months of 2014, the most in a quarter since 2008, according to analysis firm Preqin.
SAI's independent chairman Andrew Dutton will assume the role of executive chairman, it said.
SAI did not say if its decision to terminate Porges' contract was related to the takeover offer, which its board was considering. The SAI board appointed Macquarie Capital and Gilbert and Tobin to advise on the possible takeover.
PEP was likely to present the company with a fixed offer price once it completed due diligence, a source familiar with the deal told Reuters.
PEP said it was "pleased that the board has agreed to engage with it... and looks forward to understanding from the board how we can progress to due diligence in the interests of bringing forward a binding proposal to SAI shareholders".
PEP engaged Citi and Allen & Overy for the takeover offer. ($1 = 1.0821 Australian Dollars) (Reporting by Byron Kaye; Editing by Edwina Gibbs and Miral Fahmy)