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AMERICAN CAPITAL COMMITS $150 MILLION IN PORTFOLIO COMPANY FIRST CAPITAL TO SUPPORT GROWTH

Bethesda, MD – January 17, 2008 – American Capital Strategies Ltd. (Nasdaq: ACAS) announced today that in the fourth quarter of 2007 it committed financing of up to $150 million in senior subordinated debt to support the growth of its portfolio company First Capital, a leading provider of secured, working capital financing for middle market companies.  American Capital’s investment replaced its $50 million senior subordinated debt investment made in August 2006.

“Once again, we are very pleased to support First Capital’s growth initiatives. American Capital’s re-investment in First Capital is especially valuable because we were able to make a sizeable commitment at a time when few financial institutions have access to junior capital,” said Bob Grunewald, American Capital Managing Director of the Financial Services Group.  “Dislocation in the credit markets has created especially strong demand for First Capital’s prompt, professional and reliable service to middle market companies.  This year First Capital also expanded its product line with the introduction of a suite of International Supply Chain Finance solutions including Foreign Inventory Financing, Trade Payable Discounting and Export Factoring.  Our latest investment allows First Capital to seize new opportunities at a time when its competitors are being forced to reign in new investment activities and even sell off business units.“

American Capital invested directly and through its funds under management approximately $11 billion in 2007, approximately $4 billion from June 30, 2007 to December 31, 2007, and over $2 billion in the fourth quarter of 2007.  Not including funds under management, American Capital invested approximately $8 billion in 2007, over $3 billion from June 30, 2007 to December 31, 2007 (representing approximately 31% of its June 30, 2007 investments outstanding at fair value) and approximately $2 billion in the fourth quarter of 2007.  Not including funds under management, American Capital received approximately $5 billion in total amortizations, prepayments and exits in 2007.  American Capital assisted in the refinance or syndication of approximately $2 billion of senior debt for its portfolio companies in 2007 and approximately $1 billion from June 30, 2007 to December 31, 2007.  

First Capital (www.FirstCapital.com) is a leading commercial financial services firm providing prompt, professional and reliable working capital solutions and outsourcing primarily for middle-market companies and institutions.  With over $1 billion in total committed lines, First Capital is one of the largest independent and fastest-growing commercial finance companies in the United States.  The firm focuses on asset-based lending, accounts receivable management, credit protection, international supply chain financing and servicing for clients in North America and Asia.  The firm also manages asset portfolios for clients and is an active issuer of receivables-backed securities.  Combining a unique blend of traditional and progressive banking methods, First Capital provides clients with customized support needed to grow and maintain their business.  Based out of West Palm Beach, Florida, the firm has six full-service offices in major cities including New York, Los Angeles, Ft. Lauderdale, Oklahoma City and Atlanta and a subsidiary that is headquartered in Hong Kong. 

“We are pleased to partner with American Capital again as First Capital looks to take advantage of current growth opportunities,” said John Kiefer, First Capital Chief Executive Officer.  “Since the initial investment, the team at American Capital has provided not only capital, but valuable knowledge and expertise in the financial services industry.  American Capital’s timeliness and flexibility make them an ideal investor.”

ABOUT AMERICAN CAPITAL FINANCIAL SERVICES GROUP

The Financial Services Group offers capital solutions for consumer and commercial finance, insurance and asset management companies. The Group invests throughout the capital structure, including senior debt, subordinated debt and equity, and invests up to $800 million in each transaction. Companies interested in learning more about American Capital's Financial Services Group should contact Bob Grunewald, Managing Director, at (301) 951-6122.

ABOUT AMERICAN CAPITAL

American Capital is the only alternative asset management company in the S&P 500. With $20 billion in capital resources under management¹, 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 euro 5 million to euro 500 million per company in Europe.

As of December 31, 2007, American Capital shareholders have enjoyed a total return of 452% since the Company's IPO, an annualized return of 18%, assuming reinvestment of dividends.  American Capital has paid a total of $1.9 billion in dividends and paid or declared $26.16 dividends per share since going public in August 1997 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 www.AmericanCapital.com or www.EuropeanCapital.com.

¹Capital resources under management is an estimate of internally and externally managed assets and available capital resources as of November 30, 2007 and does not include any fair value adjustments subsequent to September 30, 2007.

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.