Beijing Smart Walnut Education Technology Co., also known as Walnut Coding, is exploring an initial public offering (IPO) in the United States, aiming to raise about US$100 million.

The company focuses on coding education services for children.

Other Chinese firms, including Shenzhen Cloudsky Technologies Co., Zaihui, and Zhonghe Group, are also evaluating potential US listings.

Each company is seeking to raise similar amounts.

These discussions are in early stages, and no final decisions have been reached, according to sources familiar with the matter.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ The cross-listing premium drives Chinese firms to US markets despite tensions

Chinese companies consistently pursue US listings because of the substantial financial benefits, even in periods of geopolitical tension.

Cross-listing in New York can lower a company’s cost of equity capital by 11.3% and reduce debt costs through decreased spreads, creating a significant advantage over domestic-only listings 1.

The valuation impact is striking: as of 2018, US-listed Chinese firms had a combined market value of $1.8 trillion, equivalent to 53% of the Shenzhen market and 45% of the Shanghai market 1.

This “cross-listing premium” exists largely because US markets provide access to a broader investor base and deeper liquidity pools than available domestically, which remains compelling despite heightened regulatory risks.

The recent success of tea chain Chagee Holdings, which raised $411 million and saw shares jump 16% on debut, demonstrates that investor appetite for quality Chinese listings persists despite broader market concerns.

2️⃣ Chinese IPO activity in the US follows cyclical patterns shaped by regulation

The current wave of potential listings follows a significant pullback after Didi Global’s problematic 2021 IPO triggered regulatory backlash and illustrates the cyclical nature of Chinese listings in US markets.

Chinese IPOs in the US had already been declining before the Didi incident, with only 25 companies listing in 2019 compared to 35 in 2018, raising $3.5 billion versus $9 billion the previous year 2.