MUMBAI: Star Group plans to pick up 20 per cent in Music Broadcast Pvt. Ltd. (MBPL), marking a re-entry into the private FM radio business.

Star is buying the stake from India Value Fund, (earlier GW Capital) a venture capital fund. With this, India Value Fund's holding will drop from 75 per cent to 55 per cent.

In early 2005, Star had sold its stake in MBPL, the company which operates its FM radio stations under the Radio City brand, for Rs 300 million. India Value Fund had acquired a controlling stake in MBPL.

"Star is buying back the 20 per cent it had sold earlier in MBPL. The radio business is set to explode with the government changing its policy and opening up the second phase of private FM expansion," says a source close to the company. He, however, could not confirm the price Star is paying to acquire the stake.

MBPL chief executive officer Apurva Purohit was not available for comment. Star officials also could not be reached. The government regulations permit only 20 per cent foreign direct investment (FDI) in the FM radio business.

In May 2005, Star had discontinued its arrangement of supplying content to MBPL. Later in the year the country's biggest television network in terms of revenue also ceased doing air time sales for Radio City.

Since the inception of Radio City, MBPL had contracted Star to provide its expertise in the areas of programming, ad sales and marketing. The operations were handled through DigiWave, a 50:50 joint venture between Star and the PK Mittal-promoted Ispat group.

Radio City is already operational in seven cities comprising Mumbai, Delhi, Bangalore, Lucknow, Hyderabad, Chennai and Jaipur. The plan is to launch in 13 more cities including Ahmedabad, Surat, Baroda, Sangli, Akola and Nagpur.