SCOTTISH Equity Partners, which backed IndigoVision founder Oliver Vellacott's unsuccessful attempt to engineer a management buyout of the technology company, has sold its entire stake in the video security systems specialist.

The Glasgow-based private equity firm's sale of its 6.63% stake in Midlothian-based Indigo-Vision was revealed in an announcement to the stock market yesterday.

The sale took place on Tuesday. IndigoVision shares tumbled by 80p to 411.5p that day.

It is understood the 500,000 shares held by SEP, through a company called Kuiper Limited, were sold at about 442p each. They were purchased at 255p last December, meaning SEP has realised a gain of nearly £1 million on an initial investment of £1.275m.

The Herald revealed last week that Mr Vellacott, who had three MBO proposals which were backed by SEP rejected by IndigoVision's board last November as undervaluing the company, had sold his £8m stake in the technology group to institutional investors. Mr Vellacott had held more than 22% of the company. The founder's exit as chief executive officer of IndigoVision was announced by the company last December.

Shortly after his exit from the CEO post, Mr Vellacott mounted and then abandoned a bid to oust Hamish Grossart as the technology company's chairman.

After buying its stake last December, SEP considered making a further bid proposal for IndigoVision but announced in January that it was withdrawing its interest in making an offer.

Asked about the sale of its stake, SEP told The Herald: "We acquired a stake in IndigoVision last year in the expectation that ongoing discussions with the com-pany's board would lead to agreement on an offer to take the company private.

"These discussions were not successful."

It added: "We subsequently decided to sell our stake when the time was right and have now done that. We were investors in IndigoVision during its start-up phase 15 years ago and played an important role in its early development. We wish the company and its employees well in the future."

Shares in IndigoVision were unchanged yesterday at 411.5p.