FOR IMMEDIATE RELEASE:
August 9, 2005

Contact
Jeff MacDowell, Managing Director (214) 273-6633
Brian Maney, Director, Corporate Communications (301) 951-6122

AMERICAN CAPITAL INVESTS $24 MILLION IN DIRECT MAIL LEADER

Bethesda, MD - August 9, 2005 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today it has invested $24 million in the senior subordinated debt of Direct Mail Holding LLC ("DMH"), a leading provider of direct mail production and data management services to the nonprofit fundraising, financial, publishing and consumer products markets. American Capital's investment supports an investment in DMH by Stephens Group, Inc. US Bank is providing a revolving credit facility and investing in senior term debt. DMH management is making a significant equity investment.

"We are happy to be working with Stephens for the first time, supporting their investment in a leading niche company with strong cash flows and attractive industry dynamics," said American Capital COO Ira Wagner.

American Capital has invested over $2.5 billion in the last twelve months, over $1.5 billion year to date and $217 million quarter to date. For more information about American Capital's portfolio click here.

"We are delighted to partner with Stephens, a distinguished financial firm, and back one of the most experienced and talented management teams in the direct mail industry," said American Capital Managing Director Jeff MacDowell. "DMH enjoys strong customer relationships with substantial repeat business. The Company's focus on complex, medium-volume projects, combined with its robust capabilities, positions DMH as the service provider of choice within its target markets."

Founded in 1978 and with headquarters in Mt. Pleasant, IA, DMH operates state-of-the-art facilities in California, Iowa, Ohio, Oklahoma, Texas and Virginia and employs approximately 900. The Company offers one of the broadest product lines in the industry. In addition, DMH has the ability to design, quickly produce and mail in large quantities innovative and highly personalized mail pieces that are appealing, effective and cost-efficient. DMH's proprietary processes and application of technology enable the Company to offer products that many competitors cannot easily or cost-effectively manufacture.

ABOUT AMERICAN CAPITAL

American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $5.4 billion. American Capital invests in and sponsors management and employee buyouts, invests in private equity buyouts, and provides capital directly to private and small public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.

As of July 31, 2005, American Capital shareholders have enjoyed a total return of 409% since the Company's IPO - an annualized return of 23%, assuming reinvestment of dividends. American Capital has paid a total of $787 million in dividends and paid or declared $18.29 dividends per share since its August 1997 IPO at $15 per share.

Companies interested in learning more about American Capital's flexible financing should contact Mark Opel, Senior Vice President, Business Development, at (800) 248-9340, or visit our website.

ABOUT STEPHENS GROUP, INC.

Stephens Group, Inc. is a privately held, Little Rock, Arkansas based holding company. Stephens Group is the parent of Stephens, Inc., an investment banking firm that is a member of the National Association of Securities Dealers and the New York Stock Exchange, and it also conducts extensive merchant banking activities. Investments of Stephens Group include oil and gas, health care, financial services, data processing services and software, publishing, agriculture, manufacturing and retailing.

Performance data quoted above represents past performance of American Capital. Past performance does not guarantee future results and the investment return and principal value of an investment in American Capital will likely fluctuate. Consequently, an investor's shares, when sold, may be worth more or less than their original cost. Additionally, American Capital's current performance may be lower or higher than the performance data quoted above.

This press release contains forward-looking statements. The statements regarding expected results of American Capital Strategies are subject to various factors and uncertainties, including the uncertainties associated with the timing of transaction closings, changes in interest rates, availability of transactions, changes in regional, national or international economic conditions, or changes in the conditions of the industries in which American Capital has made investments.

This announcement is neither an offer to sell nor a solicitation to buy securities.
This announcement appears as a matter of record only.