FOR IMMEDIATE RELEASE:
13 May 2008

Contact
John Erickson, Dir., European Capital Financial Services (Guernsey) Limited: +1 (301) 951-6122
Tom McHale, Dir., European Capital Financial Services Limited: +1 (301) 951-6122
Justin Cressall, Equity Capital Markets, European Capital Financial Services Limited: +1 (301) 951-6122

EUROPEAN CAPITAL DECLARES €0.15 Q2 2008 DIVIDEND, REPORTS €0.24 NOI AND €0.32 REALISED EARNINGS IN Q1 2008

St. Peter Port, Guernsey – 13 May 2008 – European Capital Limited (“European Capital”) (LSE: ECAS) announced today its second quarter 2008 dividend and its results for the first quarter of 2008.

SECOND QUARTER 2008 DIVIDEND DECLARATION

European Capital’s Board of Directors has declared a second quarter 2008 dividend of €0.15 per share to record holders as of 27 June 2008, payable on 25 July 2008.  This is a 50% increase over the second quarter 2007 dividend of €0.10 per share and is in line with the dividend guidance announced at the time of its results announcement for 2007.  European Capital has now paid or declared a total of €72.6 million in dividends since its May 2007 initial public offering (“IPO”).

2008 DIVIDEND GUIDANCE

European Capital reiterates its 2008 dividend forecast of €0.62 per share, a 68% growth over post-IPO 2007 dividends of €0.37 per share.  The remaining 2008 dividends per share are forecast to be in the following quarterly amounts.

€0.16 for Q3 2008, 23% increase over Q3 2007; and
€0.16 for Q4 2008, 14% increase over Q4 2007.

FIRST QUARTER 2008 RESULTS

Net Operating Income (NOI)
European Capital also announced today its results for the first quarter of 2008. NOI for the quarter increased 4% to €0.24 per share, compared to €0.23 per share for the first quarter of 2007.

Realised Earnings
Realised Earnings increased 19% to €0.32 per share for the first quarter of 2008, compared to €0.27 per share for the first quarter of 2007.  Realised Earnings return on equity at cost for the twelve months to the first quarter of 2008 was 11%.  Realised Earnings for the first quarter 2008 covered 213% of the €0.15 per share dividend for the first quarter 2008.

Earnings
European Capital's Earnings for the first quarter of 2008 was a loss of €1.49 per share, a decrease of €1.85 per share from the first quarter of 2007 Earnings of €0.36 per share.  Earnings return on equity for the twelve months to the first quarter of 2008 was (13)%. This loss was due to €165 million of unrealised depreciation during the first quarter of 2008.  During the first quarter, European Capital implemented Statement of Financial Accounting Standard No. 157, Fair Value Measurements, (“SFAS 157”), new principles-based guidance to US generally accepted accounting practices (“GAAP”), which caused certain changes to the methodologies used in valuing the Company's investments.

European Capital's net asset value ("NAV") per share at 31 March 2008 was €8.03, a decrease of €1.64 or 17% lower than the 31 December 2007 NAV per share of €9.67.

“We delivered excellent NOI and Realised Earnings for the quarter.” said Malon Wilkus, Chairman of the Board.  "The substantial decline in our Earnings is due to €165 million of unrealised depreciation, which we believe will have little impact on our future revenues, NOI and Realised Earnings.  This depreciation was driven by declining trading prices, the continued widening of investment spreads and our adoption of SFAS 157.  We believe that with the adoption of SFAS 157, investors will need to focus on both reported US GAAP fair values as well as values that we anticipate realising on settlement or maturity of our investments (“Realisable Value”).  In the future, we intend to report the anticipated Realisable Values on settlement or maturity of our investments as well as US GAAP values so investors can consider both."

For the first quarter of 2008, net appreciation, depreciation, gains and losses totalled €(187) million consisting of €9 million of net realised gains less €196 million of net depreciation, compared to €10 million of net appreciation, depreciation, gains and losses for the first quarter of 2007. The primary components of the €196 million of net depreciation for the quarter were as follows:

• €102 million of depreciation associated with the adoption of SFAS 157, including the widening of investment spreads;
• €51 million of depreciation associated with the write down of Private Finance investments;
• €10 million of depreciation from its Structured Products, due to the continuing widening of investment spreads;
• €21 million of net depreciation from foreign currency translation;
• €10 million of reversals of prior foreign currency appreciation associated with realised gains; and
• €2 million of net depreciation on derivatives.

"Credit quality remains good in light of the economic environment," stated John Erickson, Director of European Capital Financial Services (Guernsey) Limited.  "Most of the depreciation this quarter was not as a result of weakening credit as non-accruing loans at fair value remained within a reasonable level of 0.3% of total loans at fair value.  While the European economy may be slowing, we believe we are in the later stages of the liquidity crisis.  We are seeing bids for some assets starting to tighten in the second quarter and today it looks like March may have been the low point for wide spreads and asset depreciation though we will need to see the trend continue in order to know for certain."

In the first quarter of 2008, European Capital invested €168 million and received €115 million of proceeds from realisations of portfolio investments.

As of 31 March 2008, loans with a fair value of €4 million were on non-accrual representing 0.3% of total loans at fair value as of 31 March 2008, compared to no non-accrual loans at fair value as of 31 December 2007.

"M&A volumes declined in the first quarter but high quality companies continue to come to market even in this somewhat tighter lending environment," said Ira Wagner, President of European Capital Financial Services Limited (“ECFS”). "However, debt capital continues to be available for middle market transactions.  As the M&A market reflects slower world growth and a U.S. recession, we believe there will be great opportunities for our UK and continental European One Stop Buyouts.”

Since inception, European Capital has earned a 15% compounded annual return, including interest, dividends, fees and net gains, on 29 realisations of senior debt, subordinated debt and equity investments, totalling €1.2 billion of committed capital.   These realisations represent 35% of all amounts invested by European Capital since inception.

"Over the past several months, numerous firms have been forced to issue dilutive equity in order to fix their balance sheets," stated Tom McHale, Director, ECFS. "We have continued to have access to the capital markets, most recently issuing €267 million of AAA-rated secured floating rate notes, backed by €486 million in loans originated by European Capital.  This was one of the few asset securitisations completed on European markets this year and we are pleased to have been able to arrange this financing given the current liquidity crunch.”

During the first quarter, European Capital was also required to adopt Statement of Financial Accounting Standard No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, which gave the Company the option to fair value its financial liabilities in its financial statements.  European Capital did not elect the fair value option for any of its eligible financial liabilities.  However, European Capital will begin providing its shareholders with supplemental information on the fair value of its financial liabilities. The cost basis and fair value of European Capital’s financial liabilities as of 31 March 2008 were €949 million and €918 million, respectively, or a positive difference of €31 million.

MATERIAL DIFFERENCES BETWEEN FAIR VALUE AND REALISABLE VALUE

European Capital believes that approximately €110 million of the depreciation reflected in the results of this and prior quarters will ultimately be reversed when it exits the investments.  European Capital invests primarily in illiquid assets, which are referred to in SFAS 157 as level 3 assets, with the intention to hold the assets to settlement or maturity.  This is in contrast to the premise under US GAAP that assets generally should be valued on the basis of their current market value and, if no or limited market exists, on a hypothetical market value.  European Capital has not historically sold its investment assets on a market.  Instead it has typically settled its private finance investments at the time of a change of control transaction, such as through a sale or recapitalisation of its portfolio companies.

The current lack of liquidity in the financial markets has caused investment spreads between the cost of funds and investment income to widen dramatically on investments, which in most cases results in current fair values that are materially lower than the Company anticipates realising on settlement or maturity.

The Company is following US Regulatory Disclosures regarding SFAS 157 that allows it to disclose material differences between US GAAP fair value and values anticipated to be realised upon settlement or maturity (Realisable Value). Because European Capital believes its US GAAP fair values diverge materially from the amounts it anticipates to realise on settlement or maturity, the Company will begin to provide pro forma information on the Realisable Value of its assets in comparison to the fair value determined under US GAAP.

The following table summarises the current cost basis and fair value of our investments as of 31 March 2008 and the amount we currently anticipate realising on settlement or maturity:

⁽¹⁾ Realisable Value is a non-GAAP financial measure that is the future value that we anticipate realising on the settlement or maturity of our investments.

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 over 1,000 valuation assignments per year for clients worldwide.  Each quarter, Houlihan Lokey reviews approximately one quarter of European Capital's determination of the fair value of its portfolio company investments that have been portfolio companies for at least one year and that have a fair value in excess of €10 million, in accordance with European Capital's valuation procedures.  In the first quarter of 2008, Houlihan Lokey reviewed valuations of 23 portfolio company investments having an aggregate €781 million in fair value as of the period end.  In addition, Houlihan Lokey representatives attend European Capital's quarterly valuation meetings and provide quarterly 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 and in accordance with European Capital's valuation procedures, 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.

Financial highlights for the quarter are as follows:

⁽¹⁾ Static pool classification is based on the year the initial investment was made. Subsequent add-on investments are included in the static pool year of the original investment.

⁽²⁾ Assumes investments are exited based on Realisable Value that is anticipated to be received upon settlement or maturity.

⁽³⁾ Assumes investments are exited at current US GAAP fair value.

⁽⁴⁾ These amounts do not include investments in which we own only equity.

⁽⁵⁾ For portfolio companies with a nominal EBITDA amount, the portfolio company’s maximum debt leverage is limited to 15 times EBITDA.

⁽⁶⁾ Sales of the most recent twelve months, or when appropriate, the forecasted twelve months.

⁽⁷⁾ EBITDA of the most recent twelve months, or when appropriate, the forecasted twelve months.

⁽⁸⁾ As a percentage of our total debt investments.

⁽⁹⁾ Non euro-denominated amounts are retranslated at the exchange rate ruling at the date of original investment.

⁽¹⁰⁾ Non euro-denominated balances, other than those referred to in (9), are retranslated at the exchange rate ruling at the balance sheet date.

⁽¹¹⁾ Excludes equity investments that are the result of conversions of debt and warrants received with the issuance of debt.

⁽¹²⁾ Excludes derivative instruments.

⁽¹³⁾ Balance Sheet appreciation (depreciation) of investments excluding foreign exchange revaluation.

A summary of European Capital's dividend history post IPO and forecast follows. For more information, please visit our website at www.EuropeanCapital.com or call our Investor Relations Department at +44 (0)207 539 7100.

SHAREHOLDER CALL

European Capital invites shareholders, analysts and other interested persons to attend the European Capital Shareholder Call on Wednesday 14 May at 14:30 BST (9:30 EST).  Callers within the UK can dial +44 (0)800 62 66 06.  Other callers from within Europe should dial +44 (0)129 648 0100.  Callers within the United States should dial +1 (866) 804 8688.  The access code for callers is 386 589.

Point your browser to www.EuropeanCapital.com and click on the Q1 2008 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 14 May on our website www.EuropeanCapital.com.

AUDIO ONLY PRESENTATION AVAILABLE AFTER THE SHAREHOLDER CALL:

There will be a phone recording available from 1:00 BST Thursday 15 May until 1:00 BST Wednesday 28 May.  If you are interested in hearing the recording of the presentation, please dial +44 (0)800 032 9687 or +44 (0)207 136 9233.  The access code for callers is 65497516.

For further information or questions, please do not hesitate to call our Investor Relations Department at +44 (0)207 539 7100 or send an email to IR@EuropeanCapital.com.

ABOUT EUROPEAN CAPITAL

European Capital is a publicly traded investment company for pan-European equity, mezzanine and senior debt investments with current capital resources of approximately €2.8 billion ($4.4 billion).  It is managed by European Capital Financial Services (Guernsey) Limited (“ECFSG”), an indirect wholly-owned affiliate of American Capital Strategies Ltd. ECFSG, together with its wholly owned subsidiary European Capital Financial Services Ltd (“ECFS”), is referred to as the “Investment Manager”. ECFS has offices in Paris, London, Frankfurt and Madrid. As of 31 March 2008 the Investment Manager had 44 investment professionals and 66 support staff.

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 primarily 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 recapitalisations.

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 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) 91 423 27 60 in Madrid, or visit the website at www.EuropeanCapital.com.

ABOUT AMERICAN CAPITAL

American Capital Strategies Ltd. (Nasdaq: ACAS) is the only private equity fund and alternative asset management company that is a member of the S&P 500.  With $19 billion in capital resources under management, American Capital is the largest U.S. publicly traded alternative asset manager.

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, recapitalisations and securitisations. 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.