The investment from Tencent values the new subsidiary at 4 billion euros, Ubisoft said. That's more than double Ubisoft's current market capitalization.
Investors were hoping for a move from Ubisoft to clear up uncertainty surrounding its future after a series of challenges faced by the firm in recent years.
Ubisoft has been plagued by various issues, from financial struggles to delays to some of its key games — including its most recently released Assassin's Creed Shadows title.
In February, the firm reported a 52% drop in fiscal third-quarter net bookings, beset by underperformance of some of its key games.