Riyadh, March 8 -- Saudi Arabia's sovereign wealth fund is set to invest approximately $100 million in the Malaysian airline group AirAsia, according to sources familiar with the matter, bolstering the Gulf kingdom's ties with a region crucial for tourism. Following the news, shares saw a rise.

The Public Investment Fund (PIF) is expected to play the leading role in an AirAsia fundraising effort aimed at raising about 1 billion ringgit ($226 million), the sources said, requesting anonymity due to ongoing discussions. The Malaysian airline group is also in talks with other potential investors, including from Singapore and Japan, the sources added.

An announcement could be made within weeks, though the people cautioned that an agreement i...