Rosedale Aviation has sold its entire 48.1% stake, creating a free float of 85%, the embattled carrier claimed.
Rosedale represents the interests of the family of the late Jack Walker, who helped establish the airline in its early days.
The shares were placed by Liberum Capital.
“This transaction marks another milestone in Flybe's history. I would like to thank Rosedale Aviation for their support over many years,” new chief executive Saad Hammad said.
“I would also like to take this opportunity to welcome aboard our new shareholders and thank existing investors who have increased their holding as part of this transaction.”
The shares fell 10% to 94p. They soared over 40% on Monday as it swung to a profit in the first half of the year.
The company made a pre-tax profit of £13.8mln in the six months to end September versus a loss of £1.6mln in the comparable period.
It also revealed it would be cutting another 500 jobs as part of its cost-saving drive.