The sale was part of a wider auction of the Government's rump holdings in privatised utilities, which raised a total of pounds 257m to help fund the tax cuts announced in last week's Budget.
Rothschilds, acting for the Treasury, sold 81 million British Energy shares to HSBC James Capel at 147.5p a share - a near 50 per cent premium to the price at which the partly-paid shares were floated in July.
The auction also saw Dresdner Kleinwort Benson pick up 18.8 million shares in Scottish Power equivalent to around 1.6 per cent of the company.
The Treasury also took advantage of a buoyant market to dispose of small residual stakes in National Grid, Northern Ireland Electricity, Scottish Hydro, PowerGen, Severn Trent, South West Water and Wessex Water. Most if not all of the companies that the Treasury sold shares in are vulnerable to Labour's windfall tax.
The proceeds from the sale of the Government's remaining stake in British Energy will come as a consolation to ministers after the way the original public offer flopped so badly last summer. The fully-paid shares were priced at just 203p - close to the bottom of the Government's target range, raising just pounds 1.4bn for the taxpayer - some pounds 500m short of earlier expectations. The first day of dealings turned into an unprecedented privatisation flop as the partly paid shares crashed by more than 10 per cent from their opening price of 100p.
Since then, however, the shares have recovered to be one of the best performing stocks on the market. Last night the shares closed unchanged at 147.5p - up 47.5p on their offer price 5 months ago.
The sharp rise in the share price has led to some mutterings that the company was sold too cheaply.
However, Government sources pointed to the fact that even at the rock bottom price of 203p it was still left with nearly 13 per cent of the company on its hands.
More than 600,000 private investors applied for shares, leaving the public offer 2.4 times subscribed and resulting in the allocation for small shareholders being raised from 30 to 43 per cent of the offer.