FOR IMMEDIATE RELEASE:
August 18, 2005

Contact
Malon Wilkus, Chief Executive Officer (301) 951-6122
John Erickson, Chief Financial Officer (301) 951-6122

AMERICAN CAPITAL ANNOUNCES FINANCING COMMITMENTS FOR EUROPEAN CAPITAL

Bethesda, MD - August 18, 2005 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today it has entered into an aggregate of €201 million ($249 million) in equity commitments with a group of institutional investors on behalf of its European affiliate, European Capital Limited ("European Capital"), which is currently in formation. American Capital also announced that it will commit €499 million ($617 million) in equity financing for European Capital, bringing the total equity commitments for European Capital to €700 million ($866 million). All such equity commitments were privately placed and have not yet been funded.

The equity commitments are expected to be drawn down by European Capital over an approximately two year period to fund its investments and operations in the ordinary course of business. As previously announced by American Capital, European Capital, through its subsidiary European Capital S.A., will invest in and sponsor management and employee buyouts, invest in private equity buyouts and provide capital directly to private and mid sized public companies. A wholly-owned affiliate of American Capital, European Capital Financial Services (Guernsey) Limited, will serve as the investment manager of European Capital S.A.

While European Capital is currently in formation, it has not been incorporated and has not been authorized by the Guernsey Financial Services Commission. The equity interests in European Capital described above have not been and will not be registered under the United States Securities Act of 1933, as amended, or the laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

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 up to $250 million of senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.

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.