Macquarie Capital has been mandated to sell Origin Energy's $NZ1.81 billion stake in Contact Energy stake at $NZ4.65 a share via a block trade.

The offer price is pegged at a 7.5 per cent discount to the last close and an 8.25 per cent discount to the volume-weighted average price.

A deal at this price reflects a free cashflow yield of 9.7 per cent of which 100 per cent will be paid out through dividends, special dividends and buybacks.

A sell-down of Contact will help ease Grant King-led Origin's stretched balance sheet, where net debt has built up to about $12 billion, in part due to funding commitments for the large $24.7 billion Australia Pacific LNG project under construction in Queensland Jessica Hromas

Sources said Macquarie had secured over $NZ1 billion of cornerstone demand from roughly 10 Australian, Asian and US sovereign wealth funds

A deal was inked at 6am on Tuesday morning and an announcement has been made on New Zealand's stock exchange platform.