The sale by Mr Vellacott, who exited suddenly as chief executive of the Scottish-headquartered video security system specialist late last year before mounting then abandoning a bid to oust Hamish Grossart as chairman, was revealed in an announcement to the stock market yesterday.
Mr Grossart welcomed the move by Mr Vellacott, who shortly before last December's announcement of his departure made three separate management buyout proposals with the backing of Glasgow-based Scottish Equity Partners and had these rejected by IndigoVision's board as undervaluing the company.
"Oliver's holding has been placed," said Mr Grossart. "I think that is a satisfactory outcome for everybody."
Mr Grossart added: "I am delighted with the new shareholders. I think they are good institutions. I am delighted for Oliver. It is obviously what he wanted to do. That is terrific. I am delighted with the outcome, both for the company and for Oliver. It is excellent. It is good news."
Mr Vellacott did not respond to a request by The Herald for comment yesterday.
Asked if IndigoVision had been made aware in advance that Mr Vellacott's share placing would be happening, Mr Grossart confirmed it had, while noting the stake sale would have been negotiated between Mr Vellacott and the institutions buying the founder's stake of more than 22%.
Mr Grossart said: "We were aware of what was going on. It is not a transaction the company would itself organise because it is not new shares."
He added: "I have a high regard for Oliver."
Yesterday's stock market statement revealed Mr Vellacott's stake in IndigoVision had fallen from 1,666,751 shares to zero, as a result of a disposal on Tuesday.
It did not disclose the price at which Mr Vellacott had sold his shares. IndigoVision's shares closed at 512.5p on Tuesday, and dipped by 10p or about 2% to 502.5p yesterday.
Mr Vellacott will have benefited from a strong run by IndigoVision shares, which traded below 170p in autumn last year.
However, even after this strong run, IndigoVision shares are at little more than half of their closing peak of 1007.5p back in February 2007.
The statement on Mr Vellacott's sale did not identify the institutional investors to which he had sold his stake.
However, a separate stock market announcement revealed that Liontrust Investment Partners had acquired 550,000 shares, equivalent to 7.29% of IndigoVision.
Another statement showed Edinburgh-based Standard Life Investments had acquired 375,000 shares, equivalent to 4.972% of IndigoVision.
And a further announcement showed an increase in stockbroker Hargreave Hale's stake in IndigoVision, held on behalf of discretionary clients, from 7550 shares to 507,550 shares, equivalent to 6.73% of the company.
Midlothian-based IndigoVision last month announced that it would pay a £5.3m special dividend to investors after enjoying a 123% leap in underlying annual operating profits to £2.66m.