Stephen Schwarzman, the chief executive of private equity firm
New York-based Blackstone, one of the world’s biggest buyout firms, has been hammered as the crisis froze credit markets. Its stock is trading at about a quarter of its $31-a-share initial public offering price in June 2007. Blackstone’s shares closed up 45 cents at $7.45 on Tuesday.
“There are now golden opportunities to buy assets in almost every asset class,” Schwarzman said in a speech at an annual North American Venture Capital Summit.
Schwarzman called himself “a raging bull on private equity.”
“This market is tailor made for making a fortune in the equity market,” he said. “You can make phenomenal returns for very little investment.”
He said consumer and investor panic, together with the beginnings of what he called a “normal” recession cycle, had driven down the prices of even blue-chip stocks.
He blamed the panic on failure of the U.S. Congress to pass the first bailout package. “Congress made a complete mess of this,” he said. “It was like we’d set our house on fire and left to get an ice cream cone without calling the fire department.”
He credited senior U.S. politicians, regulators and financiers, including himself, with winning passage of the $700 billion bailout package.
“It was absolutely essential to restoring the health of (the system),” said Schwarzman. Without it, he added, “forget venture capital, forget private equity. It was an end-of-the-world scenario.”
But Schwarzman said consumers “remain scared out of their minds (and) are cutting back on their spending.”
In particular, he said people are “scared of equity markets,” adding that panic-driven selloffs have wiped out as much as $10 trillion from hedge funds.
Schwarzman said shares of equity companies, “even excellent ones,” are selling at rock-bottom prices. “This is the easiest time to make money,” he said.
“Consumers have all gone to one side of the boat (and) it risks tipping over. But once people realize that financial institutions are sound and that we’re really just going through another recession, they will be back (to the equity markets) and liquidity will come back.”
(Reporting by Mark Cardwell, additional reporting by Megan Davies in New York, editing by Matthew Lewis)