It did not make headlines at the time and you have probably not heard of it since but a little more than five years on from its establishment in the plush surroundings of London’s Mayfair, XXIII Capital has become one of the most influential investment funds in football, financing millions of pounds worth of transfers, including Antoine Griezmann’s €120m move to Barcelona and that of his replacement at Atlético Madrid, João Félix, not to mention individual clubs including Benfica and Watford.

Set up by the Australian Stephen Duval and British businessman Jason Traub for a nominal value of £2, XXIII Capital – also known as 23 Capital since the start of last year – had bases in London, New York and Los Angeles before it opened an office in Barcelona in August.

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“Spain is one of the largest markets in world football so it was essential that 23 Capital have a specialist sports team operating in one of the great sporting capitals of the world,” said Traub in a press release that boasted the company “has deployed and advised on over $3bn of transactions”. To understand how it has come to play such a significant role in the multibillion-pound industry that is football’s transfer market it is necessary to go back to August 2014.

Bernardo Silva, having starred for Benfica’s reserves in the Portuguese second division and become a regular for his nation’s youth sides, was hoping to make his breakthrough into the senior side under Jorge Jesus. Unfortunately for the midfielder – who would go on to join Manchester City for an initial €50m in 2017, winning back-to-back Premier League titles and being nominated for the PFA player of the year award in 2019 – the Benfica manager did not consider Silva ready to step up and the player was told to remain patient.

It was an awkward situation for both parties but even more so for the agent Jorge Mendes, who counted both men as clients. Sensing one of his prized assets was growing frustrated, the former nightclub DJ who turned Gestifute into one of the world’s most powerful agencies arranged for Silva to join Monaco on loan on August 2014. The principality club had signed numerous players from the Mendes stable 12 months earlier, including the Colombians James Rodríguez and Radamel Falcao, after their Russian owner, Dmitry Rybolovlev, agreed to work closely with the Portuguese super-agent.

A few days after confirmation of Silva’s move XXIII Capital began trading. Companies House showed a registration of charge document was filed on 11 September 2014 for an unspecified amount. The company was listed as being controlled by the Candlewood Investment Group, based in New York but registered in the tax haven of the Cayman Islands.

So what does all this have to do with Bernardo Silva? His move to Monaco was made permanent in January 2015 for €15.75m but it would be another year before the story became clearer. In January 2016 the Football Leaks website published three documents which revealed details of the transactions between Benfica and Monaco.

The first two concerned the agreement for Silva’s loan and permanent move and the third – dated 10 July 2015 – shows the mandate for the first instalment of the transfer fee: €5.25m. What seemed unusual, however, was that while Monaco were listed as the liable party it was XXIII Capital who were due to receive the funds rather than Benfica.

Other documents later explained that XXIII Capital had purchased the credit from the Portuguese club, a method employed for numerous other transfers in that period, including that of the midfielder Giannelli Imbula’s move to Porto from Marseille in 2015.

Benfica described their actions as “a normal financial operation”, although there was no mention of XXIII Capital in their annual financial report in 2015. That states the profit from the sale of Silva was €12.855m, meaning almost €3m appears to have gone elsewhere.

Given the lack of official documentation it is difficult to know exactly how that money has been distributed. It is likely that at least 10% of the total fee would have been allocated to Gestifute for its brokering services; records state Mendes’ company received €3.995m from Benfica that final year, which also included the transfer of João Cancelo to Valencia for €15m. The question remains how much was paid to XXIII Capital in exchange for the acquisition of the credit, with potentially €1.3m not accounted for from the €15.75m total loaned in three instalments – an amount that corresponds to 9%.

Facebook Twitter Pinterest Bernardo Silva during his period with Monaco. Photograph: Valéry Hache/AFP/Getty Images

XXIII Capital has gone from strength to strength since then. Traub was recently quoted in a series of articles in the British press where he described how the company’s strategic approach to “innovative financial solutions” had helped establish it as a global player in the football world.

“All clubs will absolutely have the same need and challenge around the fact that their intangible assets, the players, suck up all their liquidity,” he explained to the Evening Standard in August. “If you think around the principles of a transfer, you have the selling club who want the money up front, and why not, and you have a buying club who for a whole range of reasons want to defer the payment. We often get involved and can say: ‘We can solve both your needs, help one have their money up front and help the other defer over five years.’ All you need to negotiate is the cost of the finance.”

Barcelona, denied more funds from traditional lenders, took out an €85m loan with XXIII Capital in July to enable their purchase of Griezmann from Atlético. Nine days earlier Atlético borrowed €96m to recruit Felix – also represented by Mendes – from Benfica to replace him.

Atlético and Benfica have been fined by Fifa in the past for breaking its strict rules banning third-party ownership. But asked whether lenders such as XXIII Capital were enabling investors to avoid the scrutiny of world football’s governing body of such deals, Traub told the Guardian: “None of the agreements we enter into with clubs give us the ability to influence their independence in employment, transfer or any other matter, nor do they entitle us to participate in compensation payable in relation to the future transfer of a player, which are the two key principles of third-party ownership as defined by Fifa.”

A number of Mendes’s clients have moved clubs thanks to loans from XXIII Capital, starting with Silva, but Traub said “our business relationship is exclusively with the clubs as it relates to providing the club liquidity to meet its liabilities”.

The relationship between Benfica – a club with which Mendes enjoys particularly close ties – and XXIII Capital also remains strong. In February 2018 the 37-times Portuguese champions signed an agreement for the acquisition of credit from the club’s television rights – worth €100m – “in order to drive greater balance sheet efficiency”, according to Traub.

Facebook Twitter Pinterest Benfica have a strong relationship with Capital XXIII. Photograph: Patrícia de Melo Moreira/AFP via Getty Images

As for the source of XXIII Capital’s funding, one of the principal investors is Quantum Partners LP, a private investment fund managed by George Soros’s Soros Fund Management LLC, although Traub insisted he “does not have any direct contact” with the financier.

“We’re a specialist finance company, more akin to a bank in that we raise our own lines of credit and pools of money, and that allows us to provide direct financing into the sports, music and entertainment sectors,” he said.

Since 2015 it has also launched a spectacular collection of funds through the stock exchange in the Cayman Islands (CSX), with the latest three tranches of €23,358,900m, €5,655,200m and €7,273,200m listed on 4 October 2019. “The simplicity offered by the CSX was important,” Traub said. “Our notes on the CSX do not trade freely and thus we are aware of every investor, all of whom are well-known institutions in the global market. As a regulated group we have significant controls and governance around all aspects of compliance and money-laundering. We take great measures to build our credibility as a highly regarded stakeholder within football and we are strong proponents of promoting transparency and aligning ourselves to the highest standards of governance.”

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The Dutch club FC Twente, who had to be bailed out by their local government in April 2016 to keep them in business, have taken out an €8m loan with XXIII Capital, which is a key funder of the Pozzo family at Watford. Their report and financial statements of 2016 revealed the Premier League club received a £25m loan from XXIII Capital that is listed as “a fixed and floating charge”.

With only a few weeks until clubs around Europe will be limbering up for another round of spending in the January transfer window, it should prove to be another profitable period for the London-based firm.