Nochu Venture's Deepening Ties to First Brands and the Implications for Portfolio Risk

In the high-stakes world of venture capital, strategic overexposure to a single asset or sector can unravel years of careful portfolio construction. Nowhere is this more evident than in the case of Nochu Ventures, the joint venture between Norinchukin Bank and Mitsui & Co., which has found itself entangled in a $1.75 billion web of liabilities tied to the bankrupt auto-parts supplier First Brands Group. As First Brands filed for Chapter 11 on September 28, 2025 - with liabilities estimated between $10 billion and $50 billion, according to a Bloomberg report - the implications for Nochu's portfolio-and by extension, its long-term investor returns-demand urgent scrutiny.

The First Brands Quagmire

According to that Bloomberg report, Nochu's exposure to First Brands stems from trade financing extended through its joint venture, Katsumi Global. This includes approximately 210,000 receivables averaging $9,000 each, now effectively stranded as First Brands navigates insolvency proceedings. The scale of this exposure is staggering, particularly for a venture that, as of Q3 2025, has not disclosed its total assets under management (AUM) or sector allocation. Without transparency into Nochu's broader portfolio, it is impossible to quantify the exact proportion of its capital at risk. However, the $1.75 billion loss alone suggests a concentration level that could destabilize even the most diversified fund.

The fallout is not limited to Nochu. Great Elm Capital Corp. (GECC), another player in the First Brands saga, has seen its net asset value (NAV) eroded by $16.5 million due to impaired loans to the company, according to a GECC investor notice. While GECC's exposure is smaller, its experience underscores the cascading risks of overreliance on a single borrower. For Nochu, the stakes are exponentially higher.

Diversification in Theory vs. Practice

Nochu's investment strategy, as inferred from general VC trends, appears to align with principles of geographic and sectoral diversification. For instance, the venture capital landscape in 2025 is dominated by AI, green tech, and healthcare, with AI alone attracting $160 billion in global funding, according to a Forbes analysis. These sectors reflect a shift toward high-growth, innovation-driven industries-a stark contrast to First Brands' traditional auto-parts niche.

Yet, Nochu's deep involvement with First Brands raises questions about its adherence to these principles. If the $1.75 billion exposure represents a significant portion of its AUM, the venture may be overextended in a sector that is not only struggling but also misaligned with current market dynamics. This misalignment is further compounded by the lack of publicly available data on Nochu's sector allocation, leaving investors in the dark about how much of its capital is allocated to high-risk, low-growth industries.

Strategic Overexposure and Long-Term Returns

The risks of strategic overexposure are twofold. First, it amplifies downside risk in the event of a sector-specific shock-exactly what has occurred with First Brands. Second, it diverts capital from sectors with stronger growth potential, such as AI and green tech, which are forecast to dominate VC returns in the coming years, as the Forbes analysis notes. For Nochu, this creates a double bind: it is hemorrhaging capital from a failing investment while potentially missing out on gains from more promising opportunities.

Consider the broader VC landscape: AI and green tech are expected to attract $210 billion combined in 2025, with clean energy alone projected to secure $50 billion, per the Forbes analysis. By contrast, First Brands' insolvency highlights the fragility of traditional manufacturing sectors. If Nochu's portfolio is skewed toward such industries, its long-term returns will lag behind peers focused on innovation.

A Path Forward

To mitigate these risks, Nochu must take immediate steps to rebalance its portfolio. This includes:
1. Liquidating Non-Core Exposures: Prioritizing recovery efforts from First Brands while accelerating exits from other underperforming sectors.
2. Reallocating to High-Growth Sectors: Redirecting capital toward AI, healthcare, and green tech, where VC returns are expected to outperform traditional industries.
3. Enhancing Transparency: Disclosing AUM and sector allocation to provide clarity for investors and enable more informed risk management.

Failure to act could erode investor confidence and undermine Nochu's long-term viability. As the venture capital industry increasingly rewards agility and foresight, Nochu's current trajectory risks positioning it as a cautionary tale rather than a leader.

Conclusion

Nochu Ventures' entanglement with First Brands is a stark reminder of the perils of strategic overexposure. While the venture's joint venture structure and diversification principles suggest a sophisticated approach, the $1.75 billion loss underscores the need for urgent recalibration. By refocusing on high-growth sectors and improving transparency, Nochu can mitigate its current risks and align itself with the innovation-driven future of venture capital. For now, however, the path forward remains fraught with uncertainty.