Some of the supersymmetric nonlinear sigma models on exceptional groups (E7 or E8) are known to yield almost minimal necessary content of matter fields for phenomenological model building, including three chiral families and a Higgs multiplet. We explore a possible realization of such a family unification in heterotic string theory, where the spontaneously broken symmetry that we focus on is the one associated with the change of global orientation of the spin bundle embedded in the gauge bundle, which cannot be ignored in the presence of a magnetic source of the B field. We show in a simple model that it indeed gives rise to chiral matter fields on the defect similarly to the domain-wall fermions, and compare the chiral zero mode spectrum with the sigma model. The setup is reduced to a system similar to that postulated in the orbifold GUT or the grand gauge-Higgs unification model, where the origin of Z2 identification is accounted for as arising from the bolt of the Atiyah-Hitchin manifold.
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