FOR IMMEDIATE RELEASE:
January 8, 2007

Contact
Tom McHale, Senior Vice President, Finance (301) 951-6122
Brian Maney, Director, Corporate Communications (301) 951-6122

AMERICAN CAPITAL PRICES PUBLIC OFFERING OF COMMON STOCK

Bethesda, MD –-January 8, 2007 - American Capital Strategies Ltd. (“American Capital” or the “Company”) (Nasdaq:ACAS) announced today it has priced its public offering of 6.3 million shares of its common stock at $45.83 per share. Of those shares, 4.3 million shares are being offered directly by the Company and 2 million shares are being offered by the Counter-Parties (as defined below) in connection with agreements to purchase common stock from American Capital at a future date, as discussed below. American Capital has granted the underwriters an option to purchase up to an additional 945,000 shares of common stock to cover over-allotments. The offering is subject to customary closing conditions and is expected to close on Friday, January 12, 2007.

J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated, UBS Securities LLC, A.G. Edwards & Sons, Inc., Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, Robert W. Baird & Co. Incorporated, Ferris, Baker Watts, Incorporated, Morgan Keegan & Company, Inc., and Stifel, Nicolaus & Company, Incorporated, are the underwriters for the offering.  J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated and UBS Securities LLC are joint book-running managers for the offering.

The offering will be made under American Capital's existing shelf registration statement filed with the Securities and Exchange Commission. In connection with the offering, American Capital will enter into an agreement (each, a "Forward Sale Agreement") with an affiliate of J.P. Morgan Securities Inc., an affiliate of Morgan Stanley & Co. Incorporated, and an affiliate of UBS Securities LLC (the “Counter-Parties” and each, a “Counter-Party”) under which the Counter-Parties will agree to borrow and sell to retail and institutional investors in the aggregate 2 million of the offered shares of the Company's common stock at the close of this offering at the same offering price (the "Offering Price") as the 4.3 million shares being offered directly by American Capital.  Under the Forward Sale Agreements, American Capital will agree with the Counter-Parties that American Capital must sell to them in the aggregate 2 million shares of common stock at the Offering Price per share, subject to certain adjustments.  The timing of these sales, which must occur within the next year, will generally be determined by American Capital.  The Company will physically settle each Forward Sale Agreement by delivering shares of common stock to the Counter-Party under the relevant Forward Sale Agreement and such Counter-Party will deliver the Offering Price subject to certain adjustments to the Company upon each settlement.

American Capital expects to use substantially all of the net proceeds of approximately $189 million from the direct sale of 4.3 million shares of common stock to reduce the borrowings under the Company's existing revolving credit facilities and to fund investments. American Capital expects to use substantially all of the net proceeds from the shares of common stock being offered pursuant to the Forward Sale Agreements, which initially are valued at approximately $88 million, subject to certain adjustments, primarily to reduce the borrowings under the Company's existing revolving credit facilities and to fund investments. Reducing borrowings under the revolving credit facilities will create availability under the facilities, which will generally be used for funding future American Capital investments and general corporate purposes.

This press release is neither an offer to sell nor a solicitation of an offer to buy shares of common stock.  The offering of these securities will be made only by means of a prospectus and a related prospectus supplement.  When available, copies of the prospectus and prospectus supplement may be obtained from J.P. Morgan Securities Inc., 4 Chase Metrotech Center, CS Level, Brooklyn, NY 11245, Morgan Stanley & Co. Incorporated, Attn: Prospectus Delivery Department, 1585 Broadway, New York, NY 10036 (telephone number 212 761-6775 and e-mail prospectus@morganstanley.com) or UBS Investment Bank, Prospectus Department, 299 Park Avenue, New York, NY 10171 (telephone number 212-821-3000).

ABOUT AMERICAN CAPITAL

American Capital is the largest U.S. publicly traded alternative asset manager with $12 billion in capital resources under management.  American Capital invests directly and through its asset management business is a global investor in management and employee buyouts, private equity buyouts, and early stage and mature private and public companies.  American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions, recapitalizations and securitizations.  American Capital invests from $5 million to $500 million in North America and €5 million to €400 million in Europe.

This press release contains forward-looking statements. The statements regarding expected results of American Capital 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.