Chinese fintech platform FinVolution Group has acquired 4.99% stake in local lender Fujian Haixia Bank (FHB) through an all-stock transaction.

Under the share purchase agreement, FinVolution Group subscribed 281 million newly issued FHB shares.

Founded in 1996, FHB offers financial services to individuals, SMEs, corporates and institutions. The bank operates a network of 73 branches and sub-branches in Fujian province and four outlets in Zhejiang province.

As of 31 December 2018, FHB had around CNY153.1bn ($21.93bn) of assets in its books.

FinVolution Group and FHB also entered into a strategic alliance to improve consumer finance services. The scope of collaboration will include improving credit risk management capabilities, expansion and enhancing operational efficiency among others.

FinVolution Group co-CEO Feng Zhang said: “Our businesses are highly complementary, and we look forward to the launch of new growth engines while strengthening our ability to service financial institutions.

“Additionally, this investment and partnership present the opportunity for us to explore broad areas of cooperation that will help both FinVolution and FHB in business expansion, enhancing operating efficiencies, and improving risk management.

“Through leveraging our technologies-as-a-service, we believe this long-term partnership with FHB will solidify FinVolution’s leading position in the industry and accelerate our cooperation with commercial banks and other financial institutions.”

Established in 2007, FinVolution Group focuses on connecting underserved individuals with financial institutions in China.

The company also works on the development of new technologies to enhance credit risk assessment and fraud detection among others.

As of 30 September 2019, the company had more than 102 million cumulative registered users.