British private equity firm CVC Capital Partners, the majority shareholder in the prestigious Formula One Group (Formula 1) has sold a 21-per cent stake in the company worth $1.6 billion to three leading investment groups ahead of its forthcoming $2.5-billion initial public offering (IPO) in Singapore.

The buyers include US investment management firms BlackRock Inc and Waddell & Reed Financial Inc as well as Norwegian Central Bank's investment arm Norges Bank Investment Management. Further to the deal, CVC's stake in Formula 1 will be reduced to approximately 40 per cent.

''This is great news for Formula 1 and an important step in its development,'' CVC's managing partner Donald Mackenzie said in a statement.

''The addition of these three highly regarded investors to our share register is validation of this success, and we look forward to working with our new partners over the coming years," he further said.

Formula 1 holds the highest class of single-seated auto racing sanctioned by the International Automobile Federation (FIA), held on purpose-built circuits and public roads.

It conducts 20 races across the world yearly and has over 500 million TV viewers.

Currently, Formula 1 is heading for its Monaco Grand Prix this weekend, its sixth sporting extravaganza in the season.

CVC took majority control of the Group from British billionaire enthusiast Bernie Ecclestone in 2006. Ecclestone continues to be the president and the CEO of Formula One Management and Formula One Administration.

CVC will continue to be Formula 1's largest and controlling shareholder, the statement said.

Formula 1 is valued at around $7.5 billion, and according to some analysts, the total enterprise value is over $9 billion combining equity and debt.

Meanwhile Singapore Stock Exchange has cleared Formula 1's $2.5 billion IPO, the world's third largest offering this year after Facebook's $16 billion and Malaysia's Felda Global Venture's $3 billion floats.

CVC will sell part of its stake in Formula 1 at the end of June through the IPO. A global roadshow is slated for the second week of June.

Some analysts believe that Singapore has been chosen for the IPO because of relatively more stable market conditions and sentiments in Asia compared to the debt crisis-hit euro zone and a weak US market. Moreover, Singapore is one of the 20 circuits of the Formula 1 and the only one conducting the night race and has a large host of fans for the sport.

Despite the slump in the global equity markets and not much appetite shown for IPOs, some observers feel that the F1 issue is not going to be cheap, as it commands a brand premium.

Currently F1 has a long-term debt rating of B+ which could be lifted one notch up after the IPO because of the improvement in the debt profile, according to Standard and Poor's which has kept the company on 'positive' watch.

Goldman Sachs, Morgan Stanley and UBS will act as the lead managers for the IPO while Banco Santander, DBS Group and CIMB would be joint bookrunners.