(Yicai Global) Dec. 27 -- The newly established consumer finance subsidiary of Chinese fintech giant Ant Financial Services Group has secured a further CNY22 billion (USD3.4 billion) from investors that will hike its registered capital nearly four-fold and allow its small loan arms to extend more credit.

Chongqing Ant Consumer Finance is boosting its capital to CNY30 billion (USD4.7 billion), investor China Cinda Asset Management said on Dec. 24.

Hangzhou-based Ant is injecting CNY11 billion (USD1.7 billion) and will remain the largest shareholder with a 50 percent stake, Beijing-based Cinda said. While Cinda, which is controlled by the Ministry of Finance, is pumping CNY6 billion (USD941 million) into Ant Consumer Finance to raise its equity to 24 percent and become the second-largest stakeholder.

Other participants include optical lens manufacturer Sunny Optical Technology, medical device maker Yuyue Medical Equipment and Supply, education software developer Xi’an Boguan Information Technology and private equity firm Yufu Capital.

Ant Consumer Finance was set up in June as part of a major overhaul of Ant’s business practices after regulators moved in to curb the scope of operations of micro-loan platforms at the end of last year, scuttling the firm’s planned mega-initial offering. The unit has taken over Ant’s highly lucrative Huabei and Jiebei platforms and will function more like a bank with strong government oversight as opposed to the previous largely unregulated e-model.

The Chongqing-based subsidiary was founded with a registered capital of CNY8 billion. However, as consumer finance firms are only allowed to lend out around 10 times their holdings, it meant the company would only be able to extend CNY80 billion in credit.

This is far from enough, Caijing reported at the time, citing Sun Haibo, director of the Institute of Financial Regulation.

Editor: Kim Taylor