FOR IMMEDIATE RELEASE:
July 19, 2007

Contact
Tom McHale, Senior Vice President, Finance (301) 951-6122

AMERICAN CAPITAL COMPLETES $1 BILLION EQUITY OFFERING
UNDERWRITERS EXERCISE OVER-ALLOTMENT OPTION

Bethesda, MD – July 19, 2007 – American Capital Strategies Ltd. ("American Capital" or the "Company") (Nasdaq: ACAS) announced today that it has closed its previously announced public offering of common stock and that the underwriters have exercised in part their over-allotment option.  As a result, 22.4 million shares of common stock were sold in the offering at $45.05 per share (the “Offering Price”).  Of those shares, 17.4 million were offered directly by the Company and 5 million were sold in connection with agreements to purchase common stock from American Capital for delivery at future dates (the "Forward Sale Agreements"), as discussed below.  The total gross proceeds from the offering, including the over-allotment, were approximately $1 billion.

Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wachovia Capital Markets, LLC were the joint-lead book-running managers for the offering.  Morgan Stanley & Co. Incorporated and UBS Securities LLC were the co-lead managers and A.G. Edwards & Sons, Inc. and RBC Capital Markets Corporation were co-managers for the offering.

The offering was made under American Capital's existing shelf registration statement filed with the Securities and Exchange Commission. In connection with the offering, American Capital entered into Forward Sale Agreements with Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wachovia Capital Markets, LLC or certain of their respective affiliates (the “Counter-Parties” and each, a “Counter-Party”) under which American Capital agreed to sell to the Counter-Parties in the aggregate 5 million shares of common stock at the same offering price per share as the 17.4 million shares being offered directly by American Capital in this offering, 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.  In connection with hedging their respective exposures under the Forward Sale Agreements, the Counter-Parties borrowed from third party lenders and sold in the aggregate 5 million of the offered shares of the Company's common stock at the close of the offering on June 22, 2007, at the Offering Price.

American Capital expects to use substantially all of the net proceeds of approximately $748 million from the direct sale of 17.4 million shares of common stock for general corporate purposes, including for the Company’s investment and lending activities and to repay indebtedness owed under existing revolving credit facilities.  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 $215 million, subject to certain adjustments, for general corporate purposes, including for the Company’s investment and lending activities and to repay indebtedness owed under existing revolving credit facilities.  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 Merrill Lynch & Co., 4 World Financial Center, New York, NY 10080, Citi Markets and Banking, 140 58th Street, 8th Floor, Brooklyn, New York 11220, (telephone number: 718-765-6732) or Wachovia Capital Markets, LLC, 375 Park Avenue, New York, New York 10152-4077, Attn: Equity Syndicate, equity.syndicate@wachovia.com.

ABOUT AMERICAN CAPITAL

American Capital is the only alternative asset management company that is a member of the S&P 500. With $15 billion¹ in assets under management, American Capital is the largest U.S. publicly traded private equity fund and one of the largest publicly traded alternative asset managers. American Capital, both directly and through its global asset management business, is an 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 and its affiliates invest from $5 million to $800 million per company in North America and €5 million to €500 million per company 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.

¹Includes internally and externally managed assets at fair value as of 3/31/07, including our investments in externally managed funds, plus investments at cost through 6/30/07 and less repayments through 6/30/07.