FOR IMMEDIATE RELEASE:
22 August 2007

Contact
John Erickson, Chief Financial Officer, American Capital +1 (301) 951-6122
Tom McHale, Senior Vice President, Finance, American Capital +1 (301) 951-6122

EUROPEAN CAPITAL INCREASES Q3 DIVIDEND 30% TO €0.13
REPORTS €0.18 NOI AND €0.21 REALISED EARNINGS IN Q2 2007

St. Peter Port, Guernsey – 22 August 2007 – European Capital Limited (“European Capital”) (LSE: ECAS) announced today its third quarter 2007 dividend and its results for the second quarter of 2007.

THIRD QUARTER 2007 DIVIDEND DECLARATION

European Capital’s Board of Directors has declared a third quarter 2007 dividend of €0.13 per share payable on 26 October 2007 to record holders of its ordinary share on the register as of 16:30 BST on 28 September 2007. This is a 30% increase over the second quarter 2007 dividend of €0.10 per share. This is in line with the dividend target announced at the time European Capital declared its second quarter 2007 dividend. European Capital has now paid or declared a total of €24.9 million in dividends since its May 2007 initial public offering (“IPO”).

2007 DIVIDEND GUIDANCE

European Capital is reiterating its target of total 2007 dividends post IPO of €0.37 per share. This would represent a 37% increase over the total 2007 post IPO dividends targeted in the European Capital prospectus of €0.27 per share. European Capital continues to target a fourth quarter 2007 interim dividend of €0.14 per ordinary share.

SECOND QUARTER 2007 RESULTS

Earnings for the quarter increased €23.4 million to €25.7 million, compared to €2.3 million for the second quarter of 2006. Earnings per share for the quarter increased €0.24 to €0.27 compared to €0.03 for the second quarter of 2006. For the quarter, net portfolio appreciation and gains, excluding foreign exchange translation, totalled €3.2 million compared to €nil for the second quarter of 2006.

Earnings less appreciation (depreciation) and foreign currency appreciation (depreciation) (“Realised Earnings”) increased €0.17 to €0.21 per share for the quarter compared to €0.04 per share for the second quarter of 2006. Net operating income (“NOI”) increased €0.13 to €0.18 per share from €0.05 per share for the second quarter of 2006.

"This is a great time to be a well capitalised financial institution," said Malon Wilkus, European Capital Chairman. "With less than 0.6:1 debt to equity, European Capital has huge competitive advantages in this new credit environment. With our One Stop Buyout™ and one stop financing, we fund transactions that are impossible for some of our competitors to close. With demonstrated access to capital, we are taking advantage of lower multiples, wider spreads and better terms to generate outstanding risk adjusted returns for our shareholders."

Second quarter 2007 dividends were €0.10 per share. For the quarter, European Capital’s dividend payout ratio was 48% of Realised Earnings of €0.21 per share. European Capital’s net asset value (“NAV”) per share at 30 June 2007 was €9.82, a €0.09 increase over the 10 May 2007 IPO NAV per share of €9.73.

“The advantage of our business model becomes more evident in a widening spread environment like today,” said John Erickson, American Capital Chief Financial Officer. “As interest rate spreads widen, our interest income and our spread income generally grows, which allows us to increase our NOI and our dividends. During widening spread environments, we may experience slower growth in our equity portfolio as more expensive credit reduces valuation multiples, but our growing spread income should allow us to continue to generate excellent returns on equity, just when other companies find it difficult to produce similar results.”

During the second quarter of 2007, European Capital completed an IPO of 14.6 million shares, including the full exercise of the over-allotment option granted to the underwriters, at a price of €9.84 per share, for gross proceeds of approximately €144 million. The shares are traded on the London Stock Exchange under the ticker symbol “ECAS”. Prior to the IPO, American Capital exercised its warrant to purchase 18.75 million shares of European Capital for an exercise price of €9.50 per share, or €178 million. As at 30 June 2007 European Capital’s market capitalisation was €1.1 billion.

"The current credit and economic environment is ideal for us to continue our growth,” said Ira Wagner, President of European Capital Financial Services Limited, the Investment Sub-Manager of European Capital. “In the past few weeks, European Capital's stock price has declined along with most financial stocks. However, European Capital has a much better capitalised balance sheet than many financial institutions, CLOs and hedge funds; some of which are levered above 4:1 debt to equity. We are levered less than 0.6:1 debt to equity and are in good shape to handle continued uncertainty in the capital markets. In recent months we have opened offices in Frankfurt and Madrid to provide better coverage of middle market opportunities in these markets."

In the second quarter of 2007, European Capital invested €0.7 billion of capital. In the second quarter of 2007, European Capital had €3.2 million of net appreciation, depreciation, gains and losses, excluding foreign currency exchange translation. This is comprised of net appreciation of €0.9 million and net gains of €2.3 million.

The weighted average effective interest rate on European Capital's total investments in debt securities at 30 June 2007 was 12%. At the same time, one loan totalling €20 million was on non-accrual. This is 1.6% of total loans at 30 June 2007, compared to no loans at 30 June 2006. The fair value of this loan at 30 June 2007 was €10.7 million or 0.9% of total loans at fair value.

“Our portfolio continues to perform very well, with our delinquencies and non-accruals at less than 2% of total loans,” said Ira Wagner, “We believe the current environment, whereby many investors have lost access to capital despite very low commercial loan default rates, will result in a significant increase in our investment opportunities over and above our already outstanding deal flow. We continue to focus on developing one of the largest middle market deal flows in our industry so that we can continue to be extraordinarily selective as to which companies we invest in. We also continue to have the significant advantage of not being reliant on commercial or investment banks for financing for our One Stop Buyouts™ and one-stop-financings because we are able to fund the entire transaction. In addition, when we conclude that it is time to sell a portfolio company, we may choose to provide the buyer with the appropriate debt financing to supplement their equity to fund the transaction; a capability most of our competitors lack. Therefore, we continue to believe that our capital flexibility and our very large deal flow will provide us with excellent investment and exit opportunities going forward.”

Since its inception in August 2005 up until 30 June 2007, European Capital has invested in 58 portfolio companies totalling €2.3 billion. European Capital has earned a 19% compounded annual return, including interest, dividends, fees and net gains, on eight complete portfolio company realisations of senior debt, subordinated debt and equity investments, totalling €214 million of invested capital. These realisations represent 9% of all amounts invested by European Capital.

"Our low levered balance sheet and capital markets creditability have allowed us to execute our IPO during a time when access to capital was closed to many institutions," said Tom McHale, Senior Vice President of Finance, American Capital. "We have no investments in sub prime residential mortgages. Zero percent of our portfolio today is in CMBS investments. Less than 0.5% of our portfolio assets are in CDOs. We have few covenant-lite loans. And, since inception our equity investments have produced a 27% IRR. We are very well capitalised and have a portfolio that is performing in a market where opportunities have just become far more profitable."

THIRD PARTY VALUATION OF PORTFOLIO INVESTMENTS

European Capital’s Board of Directors is responsible for determining the fair value of European Capital’s portfolio investments on a quarterly basis. In that regard, the Board retains Houlihan Lokey Howard & Zukin Financial Advisors Inc. ("Houlihan Lokey") to assist it by having Houlihan Lokey regularly review a designated percentage of fair value determinations. Houlihan Lokey is a leading valuation firm engaged in approximately 1,000 valuation assignments per year for clients worldwide. Each quarter, Houlihan Lokey reviews European Capital’s determination of the fair value of all portfolio companies that have been a portfolio company at least one year and that have a fair value in excess of €10 million. In the second quarter of 2007, Houlihan Lokey reviewed valuations of 12 portfolio company investments having an aggregate €355 million in fair value as of the period end. In addition, Houlihan Lokey representatives attend European Capital’s quarterly valuation meetings and provide periodic reports and recommendations to the Audit Committee of the Board of Directors.

For those portfolio company investments that Houlihan Lokey has reviewed during each applicable period, using the scope of review set forth by European Capital’s Board of Directors, the Board has made a fair value determination that is within the aggregate range of fair value for such investments as determined by Houlihan Lokey.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

European Capital has made available its Interim Consolidated Financial Statements for the six months ended 30 June 2007. A copy may be downloaded from www.EuropeanCapital.com.

Copies of the Interim Consolidated Financial Statements will be submitted to the UK Listing Authority and will be shortly available for inspection at the UK Listing Authority’s Document Viewing Facility, which is situated at:

Financial Services Authority
25 North Colonnade
Canary Wharf
London
E14 5HS
Tel. +44 (0)20 7676 1000

Financial highlights for the quarter are as follows:

A summary of European Capital’s dividend history post IPO and target follows. For more information, please visit our website at www.EuropeanCapital.com or call our Investor Relations Department at +44 (0) 800 458 0770.

SHAREHOLDER CALL

European Capital invites shareholders, analysts and other interested persons to attend the European Capital Shareholder Call on Thursday 23 August 2007 at 15:00 BST (10:00 EDT). The dial in number will be +1 (612) 332-0335. Callers within the United States should dial +1 (800) 288-8961. Please advise the operator you are dialling in for the European Capital Shareholder Call.

Point your browser to www.EuropeanCapital.com and click on the Q2 2007 Shareholder Call Slide Show button.

BEFORE THE CALL:

REVIEW SLIDE PRESENTATION IN ADVANCE OF THE SHAREHOLDER CALL – The quarterly shareholder presentation includes a slide presentation to accompany the call that participants may download and print prior to the call. You may wish to take the time to review the slides in advance of the Shareholder Call.

DURING THE CALL:

VIEW STREAMING SLIDE PRESENTATION DURING THE SHAREHOLDER CALL – During the Shareholder Call you may watch and listen to the webcast or listen to the Shareholder Call by phone and step through the slides at your own pace.

AFTER THE CALL:

LISTEN AND VIEW AUDIO SLIDE PRESENTATION AFTER THE CALL – The audio of the Shareholder Call combined with the slide presentation will be made available after the call on 23 August on our website www.EuropeanCapital.com.

AUDIO ONLY PRESENTATION AVAILABLE AFTER THE SHAREHOLDER CALL:

There will be a phone recording available from 22:00 BST Thursday 23 August until 04:59 BST Saturday 8 September. If you are interested in hearing the recording of the presentation, please dial +1 (320) 365-3844. Callers within the United States may dial +1 (800) 475-6701. The access code for all callers is 882240.

For further information or questions, please do not hesitate to call our Investor Relations Department at +44 (0) 800 458 0770.

ABOUT EUROPEAN CAPITAL

European Capital is a publicly traded investment company for pan-European equity, mezzanine and senior debt investments with capital resources of approximately €2.1 billion ($2.9 billion). It is managed by European Capital Financial Services (Guernsey) Limited (“ECFSG” or “the Investment Manager”), a wholly-owned affiliate of American Capital Strategies, Ltd (“American Capital”).

European Capital invests in and sponsors management and employee buyouts, invests in private equity buyouts and provides capital directly to private and public companies headquartered predominantly in Europe. European Capital generally invests between €5 million and €500 million per transaction in equity, mezzanine debt and senior debt to fund growth, acquisitions and recapitalizations.

The investment objective of European Capital is to provide investors with dividend income and the potential for share value appreciation by investing in debt and equity investments in private and public companies headquartered primarily in Europe.

European Capital seeks to achieve this through pursuing the following types of investments:

European Capital One- Stop Buyouts™
Through our One Stop Buyouts™, European Capital provides equity, mezzanine debt and senior debt as the lead investor in the buyout of private and public companies.

Mezzanine Direct with Sponsors
European Capital provides debt and equity financing for buyouts sponsored by private equity firms where European Capital is either the sole or lead mezzanine debt investor.

Syndicated Mezzanine and Senior Debt
European Capital provides mezzanine and senior financing for buyouts sponsored by private equity firms where European Capital is neither the sole nor lead mezzanine or senior debt investor.

Direct Investments
European Capital provides debt and equity financing directly to private and public companies, which is used for growth, acquisitions or recapitalisations, and investing in structured finance vehicles.

Companies interested in learning more about European Capital's flexible financing should contact Simon Henderson or Nathalie Faure Beaulieu at + 44 (0)20 7539 7000 in London, Jean Eichenlaub at + 33 (0)1 40 68 06 66 in Paris, Robert von Finckenstein at +49 (0) 69 71 71 297-0 in Frankfurt, or Luis Felipe Castellanos at +(34) 91 745 99 63 in Madrid, or visit the website at www.EuropeanCapital.com.

ABOUT AMERICAN CAPITAL

American Capital Strategies Ltd. is an affiliate of European Capital and the only alternative asset management company that is a member of the S&P 500. With $16 billion 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.

IMPORTANT DISCLOSURES

This document may contain “forward-looking statements”. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Many of these risks and uncertainties relate to factors beyond European Capital’s control or which cannot be estimated precisely. These Factors include, but are not limited to, uncertainties associated with the timing of transaction closings, changes in interest rates, availability of transactions, changes in regional, national or international economic conditions, and changes in the conditions of the industries in which European Capital has made investments. Actual outcomes and results may therefore differ materially from any outcomes or results expressed or implied by any such forward-looking statements.

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

Nothing in this document is intended to be a profit forecast.