Sweden's Embracer said in a statement it was issuing 99.9 million shares at a price of 103.47 per share to Savvy Gaming Group which is owned by Saudi Arabia's $600 billion Public Investment Fund (PIF), raising 10.3 billion Swedish crowns ($1.05 billion).
Upon settlement the fund would hold 8.1% of shares and 5.4% of votes in Embracer, it said.
PIF has been increasing its exposure to the video gaming industry, most recently it took a 5% stake in Nintendo, in May.
Embracer works under a model where founders of acquired companies run their firms as independent businesses with full creative and operational freedom.
($1 = 9.7768 Swedish crowns)
(Reporting by Anna Ringstrom, additional reporting by Saeed Azhar in Dubai; Editing by Kirsten Donovan)