Oct. 28 (Bloomberg) -- Stephen Schwarzman, chairman of Blackstone Group LP, said private-equity firms that buy companies during the credit crisis may see ``phenomenal'' profits once global economic growth resumes.

``In periods like this, people get scared out of their minds,'' Schwarzman said in a speech at the North American Venture Capital Summit in Quebec City today. ``This kind of environment is tailor-made for making absolute fortunes in the private-equity business.''

Falling asset prices are bound to help investors, said Schwarzman, whose New York-based firm oversaw $119.4 billion on June 30, including the world's largest buyout fund. Companies being acquired by private-equity firms at just three to four times earnings before taxes, depreciation and amortization will boost future returns, he said.

``I'm not Robert De Niro, but I'm close to a raging bull on private equity,'' Schwarzman said. ``This is a wonderful time to be an investor. In almost every asset class because of this dislocation, you can make phenomenal returns with very little risk.''

Some recent investments have already paid off for Blackstone, which Schwarzman co-founded in 1985 after leaving Lehman Brothers Holdings Inc. Blackstone earned a 21 percent return after buying a senior class of commercial mortgage-backed bonds from Lehman before it filed for bankruptcy in September, he said.

Consumer `Panic'

Schwarzman expects ``really terrible'' fourth-quarter earnings from consumer-driven companies such as retailers. The U.S. economic slowdown will last longer than the 1990-91 recession because Americans are concerned about losing their jobs, he said.

``Consumers have run away in a panic,'' he said. ``This cycle, all logic would say, will be tougher and deeper because of the nature of the coordinated global consumer fears. It will take longer to get out of.''

He praised governments for their efforts to shore up banks and restore investor confidence in the global financial system during the last two months by guaranteeing customer deposits and interbank loans.

``Governments of the world have done an amazing job of stopping what would have been the collapse of the global financial system,'' Schwarzman said. ``We were unbelievably close to losing the system. Now we have much more stable financial institutions that will work their way back into functionality and health.''

Schwarzman warned commercial real-estate investors not to expect an immediate rebound in prices.

``Real estate now is suffering because there is no liquidity on a global basis for companies,'' he said. ``That liquidity will come back but it will come back relatively slowly.''

To contact the reporter on this story: Frederic Tomesco in Quebec City at tomesco@bloomberg.net.

Last Updated: October 28, 2008 17:32 EDT