The Government has driven a harder bargain in setting the fees for selling up to 49 per cent of Meridian Energy but when all other costs are taken into account the total bill for the float could still be up to $41.5 million.
Offer documents for the power company registered on Friday reveal the breakdown of how much the deal makers could get paid for partially privatising the state-owned asset.
The three investment banks involved - Deutsche Bank, Goldman Sachs, and Macquarie - are guaranteed a base fee of $750,000 each.
That is higher than the base fees for Mighty River Power of $666,666 paid to Goldman Sachs, Macquarie and First NZ Capital/Credit Suisse.
But the performance fee has been slashed.
The investment banks in charge of selling Mighty River had the potential to earn up to $1,333,334 each if they reached certain price and value targets.
This time around the bankers will be able to earn only up to $750,000 for performance. Commission fees are then paid on top of that.
A Treasury spokesperson confirmed higher hurdles had been set for Meridian Energy.
Mighty River Power cost $40.8 million to float, of which the Government paid $28 million and Mighty River shelled out $12.8 million.
That put the cost at 2.4 per cent of $1.7 billion raised. Meridian's fee could be under 2 per cent of the up to $2.3 billion the Government could raise.
The costs include all issue expenses including brokerage and commission fees, legal and accounting fees, advertising, printing and postage.
An investment banking source, who does not work for one of Meridian's investment bankers, said the percentage was "surprisingly low" compared with past floats.
"It used to be as wide as 6 per cent." he said. "Normally if you think about big company floats you need to think in the range of 3 to 5 per cent depending on the complexity."
The source said the Meridian float would have involved quite a lot of preparatory work for the capital structure of Meridian and the float itself. But being second cab off the rank had saved some money.
"What we have got is some economics in size. They haven't spent a lot more but it's quite a bit bigger."
The source said Mighty River Power would have cost more because it was the first in the mixed ownership model to be floated.
"Most of it would be attributed to the first one to get off the ground. If it had come after it would have been less."
But Brian Gaynor, an executive director of Milford Asset Management, said initial public offers were a "gravy train" for the investment banks.
"Is this too high? They are all too high."
Gaynor said bankers were incentivised to get the highest price possible for the seller but there was little to ensure the price of the shares was not lower a year after the float.
He said that while the Meridian float was bigger, the size of a float did not make much difference to its costs.
"You are still having to go through the same process."
The bankers and brokers involved in the deal will get paid after the sharemarket listing, set down for October 29, despite 40 per cent of the money not due to be paid until May 2015.
Gaynor said that was normal for instalment-type payment schemes.